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Forex: EUR/USD retraces losses on US session

After printing the daily low at 1.2912 by the time that US data was being published, the EUR/USD pulled back and retraced its losses at 1.2961 opening price. The upside is finding some resistance at 1.2970 as of writing.

The US current account deficit narrowed from $-112.4B to $-110.4B in Q4, beating the $-112.80B consensus. However, Q3 data was revised much higher from $107.51.

In the week ending at March 10 week, initial jobless claims dropped from 342K (revised from 340K) to 332K, against a market consensus pointing to 350K. Continuing claims rose from 3.113M to 3.024M, better than the expected 3.100M.

As expected, the US Producer Price Index rose 0.7% (previously at 0.2%) (MoM) and 1.7% (previously at 1.4%) (YoY) in February. Excluding food and energy, data eased from 1.8% to 1.7% (YoY), with a monthly rise of 0.2%.

"The EUR/USD currency pair continues moving downwards. I think today the price may reach a new minimum at the level of 1.2920 and then start growing up towards the level of 1.3030", wrote Roboforex.com analyst Igor Sayadov, pointing to a new descending movement towards the target at 1.2880 before a bounce back to 1.3195.

Forex Flash: USD/NOK under pressure as equities rise in US – UBS

The initial wave of NOK downside was via the EUR/NOK as Qvigstad's comments earlier this year prompted revisions of policy expectations. This was also happening during the 'AAA unwind' phase in favor of the EUR, and the effects are still being felt. Indeed, “USD/NOK buying had some of these elements as well, however now with US equity markets clearly outperforming and data also continuing to register relative and absolute gains, it is no surprise that unwinding is happening across the board and given the small size of the Norwegian asset market, the unwind is hurting the currency disproportionately.” notes Research Analyst Gareth Berry at UBS.
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According to the Westpac Strategy Team, “We remain bearish towards the NZD in the short- term, targeting 0.8155 at least, and 0.8050 beyond that. Positioning remains a headwind, with little of the extreme long speculative positioning having been pared back, and the widening NZ drought is now assessed by the RBNZ as worth -0.3% to GDP this year with downside risk.”
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