30 Mar
Despite weak Spanish inflation figures, the EUR/USD crosses above 1.0850.
FUNDAMENTAL OVERVIEW
- After statistics from Spain revealed that the annual HICP decreased to 3.1% in March from 6% in February, EUR/USD continues to rise above 1.0850. Investors are anticipating the US Q4 GDP reading as well as German inflation figures.
- Following Wednesday’s choppy activity, the EUR/USD has continued to move sideways above 1.0800. The Euro is still supported by the risk-friendly market environment, but a weak inflation report from Germany could lead to a decline in the exchange rate.
- The European Central Bank’s (ECB) preferred measure of inflation, the Harmonized Index of Consumer Price (HICP), decreased from 6% in February to 3.1% in March, according to statistics from Spain earlier in the day. The immediate response dragged EUR/USD to 1.0820 because of this print came in significantly below the market consensus of 4%. However, the pair found its footing again as the Euro Stoxx 50 Index started more than 1% higher.
- Germany’s yearly HICP is anticipated to decrease from 8.7% in February to 7.3% in March. A reading below 7% could make the Euro lose the appeal, whereas a print greater than anticipated should help the currency.
- However, the US Dollar may struggle to find demand if the risk rally continues into the afternoon and Wall Street’s major indexes continue their robust gains from Wednesday. In that case, even if there is an adverse reaction to the German data, EUR/USD’s downside is likely to stay constrained.
- Several FOMC officials will be speaking later in the day, it’s also important to note. FOMC Chairman Jerome Powell reportedly told the Republican Study Committee that they plan to increase the policy rate one more time this year, according to a Bloomberg story on Wednesday.
- Markets are presently pricing in a 60% likelihood that the Fed will maintain its policy rate at the upcoming meeting, according to the CME Group Fed Watch Tool. If Fed officials convey a similar message and express their readiness to raise the rate once more in May, the USD may gain strength and have a significant negative impact on EUR/USD.
EUR/USD TECHNICAL ANALYSIS DAILY CHART:
Technical Overview
- The relative strength index (RSI) gauge is holding near 60 on the daily chart, indicating that EUR/USD has more upside potential before becoming technically overbought. Initial opposition for the pair is at 1.0870 (static level), which is located between 1.0900/1.0910 (psychological level, which marks the peak of the most recent uptrend), and 1.0930.
- Before 1.0800, the 20-period Simple Moving Average (SMA), a Fibonacci 23.6% retracement of the most recent uptrend, provides important support for the decline. (Psychological level, 50-period SMA). The latter could be broken by a four-hour closure below it, which would allow for a prolonged decline towards 1.0760 (Fibonacci 38.2% retracement).
- EUR/USD is currently trading in an up channel.
- EUR/USD is currently trading above all SMA.
- RSI is in buying zone which suggests bullishness and Stochastic suggests an up trend.
- EUR/USD resistance is at 1.08589 & its immediate support level is 1.08203
HOW TO TRADE EUR/USD
EUR/USD is presently trading in an upward channel, it has broken its previous day’s high, and is now at a zone of resistance; if this zone is broken, a further upside to the next resistance is possible.
