EUR/USD has lost ground on Wednesday, paring the strong gains which marked the Tuesday session. Currently, the pair is trading at the 1.0760. On the release front, there are no major economic indicators out of Europe or the US. In the eurozone, January’s current account surplus slipped to EUR 24.1 billion, well off the forecast of EUR 29.3 billion. This marked the lowest surplus since July 2016. In the US, today’ highlight is Existing Home Sales, which is forecast to drop to 5.59 million. On Thursday, the US releases Unemployment Claims, and Fed Chair Janet Yellen will speak at an event in Washington, D.C.
With a lack of key fundamentals this week, the markets are focusing on comments from FOMC members who will be speaking this week, including Fed Chair Janet Yellen on Thursday. On Monday, Chicago Fed President Charles Evans said he expects the Fed to raise rates two more times this year. This echoes the Fed’s dot point plot as well as last week’s rate statement. Although three rate hikes in 2017 would be no mean feat, the markets would like four hikes, given the strong performance of the US economy. The Fed’s cautious approach disappointed the markets, as the US dollar has posted broad losses since last week. The euro has taken full advantage, as EUR/USD punched above the 1.08 line on Tuesday and hit 7-week highs.
In the Netherlands, Prime Minister Mark Rutte comfortably won last week’s election, defeating far-right candidate Geert Wilders, a euro-sceptic. Next stop on the election train is France, which holds presidential elections next month. Polls have far rightist Marine Le Pen and centrist Emmanuel Macron running neck-and-neck in the first round of the presidential election on April 23. Still, Macron is expected to win in the second-round vote in May. In a highly-anticipated television debate on Monday, Macron and Le Pen had a chance to hawk their wares, and a survey found that Macron won the debate. Le Pen, leader of the far-right, has pledged to take France out of the eurozone and hold a referendum on EU membership. Macron’s strong showing in the debate has improved market sentiment and helped boost the euro on Tuesday. France boasts the number two economy in the eurozone, so we can expect more volatility from the euro as we get closer to Election Day.