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EUR/USD Slips Ahead of FOMC Meeting

March 18, 2014 by

EUR/USD declined today after the ZEW economic sentiment for Germany declined more than was expected, and the sentiment for the whole eurozone was also poor. (Event A on the chart.) At the same time, US housing data exceeded expectations. The positive fundamental indicator adds incentive for the Federal Open Market Committee to trim its monthly asset purchases on tomorrow’s monetary policy meeting.

Housing starts were at the seasonally adjusted annual rate of 907k in February, near expectations almost unchanged from the January figure of 909k. Building permits were at the seasonally adjusted annual rate of 1,018k, exceeding the forecast of 970k and the previous month’s value of 945k. (Event B on the chart.)

CPI increased 0.1% in February on a seasonally adjusted basis, at the same rate as in January. Market participants expected such reading. (Event B on the chart.)

Net foreign purchases rose by $7.3 billion in January. It was better reading than the December drop by $45.9 billion but was still below the median forecast of $23.4 billion growth. (Event C on the chart.)

EUR/USD-2014-03-18

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