EURUSD: oversold
The US inflation data was in the spotlight of markets during the previous week. Inflation rate in March was 3.5% on a yearly basis, which was higher from the market estimate of 3.4%. At the same time core inflation rate was standing at 3.8%, again higher from estimated 3.7%. Inflation rate on a monthly basis was 0.4% in March. At the same time the Producers Price Index in March was standing at 0.2%, lower from market estimate of 0.3%. Michigan Consumer Sentiment preliminary for April was 77.9, a bit lower from expected 79.
The FOMC meeting Minutes were released during the week, where it has been revealed that Fed officials were looking for more convincing data in order to trigger rate cuts. This was one of additional signals to the market that the Fed might postpone its rate cuts during the course of this year amid persistent inflation.
The European Central Bank held its regular meeting and left rates unchanged, as was widely expected. Within a statement after the meeting, it had been noted that the first rate cuts might come in June in case that inflation stays on the down-course toward the 2% target. Inflation rate final for March for Germany was 2.2% without change from previous post.
The inflation data was the one that significantly moved the market during the previous week, as well as the value of both USD and EUR. The currency pair started the week around 1.086 level, reached its highest value at 1.088, and then turned strongly toward the downside, reaching the lowest weekly level at 1.062. Around this level the currency pair ended the week. This was indeed a strong move, not so frequently seen on the currency market, but it happens from time to time. The RSI reached a clear oversold side, indicating a potential for a short term reversal. Moving averages of 50 and 200 days are still moving very close to each other, and not providing much information about potential for a clear cross or no-cross.
The markets priced their expectations during the previous week, which would imply that some relaxation could be expected in the week ahead. Also, considering that there is no currently important news scheduled for a release in the week ahead, some increased volatility should not be expected. Historically, the support line stands at 1.067, which will be tested at the start of the trading week. At this moment there is no indication on charts that this line could be breached. The currency pair would most probably turn to the upside toward levels above 1.07. Next significant resistance line stands at 1.08, but there is a very low chance that it might be reached in the week ahead.
Important news to watch during the week ahead are:
Euro: ZEW Economic Sentiment Index for April for both EuroZone and Germany, Inflation Rate final for March for EuroZone,
USD: Retail Sales for March, Building Permits preliminary for March
The FOMC meeting Minutes were released during the week, where it has been revealed that Fed officials were looking for more convincing data in order to trigger rate cuts. This was one of additional signals to the market that the Fed might postpone its rate cuts during the course of this year amid persistent inflation.
The European Central Bank held its regular meeting and left rates unchanged, as was widely expected. Within a statement after the meeting, it had been noted that the first rate cuts might come in June in case that inflation stays on the down-course toward the 2% target. Inflation rate final for March for Germany was 2.2% without change from previous post.
The inflation data was the one that significantly moved the market during the previous week, as well as the value of both USD and EUR. The currency pair started the week around 1.086 level, reached its highest value at 1.088, and then turned strongly toward the downside, reaching the lowest weekly level at 1.062. Around this level the currency pair ended the week. This was indeed a strong move, not so frequently seen on the currency market, but it happens from time to time. The RSI reached a clear oversold side, indicating a potential for a short term reversal. Moving averages of 50 and 200 days are still moving very close to each other, and not providing much information about potential for a clear cross or no-cross.
The markets priced their expectations during the previous week, which would imply that some relaxation could be expected in the week ahead. Also, considering that there is no currently important news scheduled for a release in the week ahead, some increased volatility should not be expected. Historically, the support line stands at 1.067, which will be tested at the start of the trading week. At this moment there is no indication on charts that this line could be breached. The currency pair would most probably turn to the upside toward levels above 1.07. Next significant resistance line stands at 1.08, but there is a very low chance that it might be reached in the week ahead.
Important news to watch during the week ahead are:
Euro: ZEW Economic Sentiment Index for April for both EuroZone and Germany, Inflation Rate final for March for EuroZone,
USD: Retail Sales for March, Building Permits preliminary for March
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