EURUSD: it`s a Fed`s week
The inflation in the US is a bit persistent, reaching 3.2% on a yearly basis in February, which was modestly above market estimate of 3.1%. Core inflation was also higher from the forecasted 3.7%, by reaching 3.8% on a yearly basis. Producers Price Index in February was increased by 0.6% on a monthly basis, much higher from the market estimate of 0.3%. At the same time, Retail Sales reached 0.6% per month in February, which was a bit lower from forecasted 0.8%. Michigan Consumer Sentiment preliminary for March reached the level of 76.5, which was a bit lower from expected and prior figure of 76.9.
Inflation rate in Germany reached 2.5% in February on a yearly basis, which was lower from previous 2.9%, but still exactly in line with market expectation. Inflation rate on a monthly basis was standing at 0.4%.
For the last two weeks the currency pair was traded in anticipation of the Fed's rate cuts in the coming period, where USD was traded continuously lower, reaching the level of 1.096 against euro. However, since the US inflation data were published, the USD gained in value, considering that the market is now anticipating that the Fed will be reluctant to cut rates during the course of this year, so it might be postponed for some later period. The USD gained again, and the currency pair ended the week at 1.088. The RSI is still not ready to pass the line of the 50, and start its move toward the oversold market side. It ended the week at level of 53. Moving average of 50 days is moving quite close to its MA200 counterpart, indicating that the cross might come in a relatively short period of time.
It should be considered that in the week ahead the FOMC meeting is scheduled, as well as FOMC economic projections. This will be closely watched by the markets, in which sense, some higher volatility is quite possible. Based on current charts, the support line at 1.08 has not been clearly tested during the previous week, which leaves some space to the market to test it in the week ahead. Also, on the opposite side, there is equal probability for a move toward 1.09 and above.
Important news to watch during the week ahead are:
Euro: Core Inflation Rate y/y final for February for the Euro Zone, ZEW Economic Sentiment Index for March for the Euro Zone and Germany, HCOB Manufacturing PMI Flash for March for Germany, ECB General Council Meeting, Ifo Business Climate in March for Germany.
USD: Building Permits preliminary for February, FED Interest Rate Decision, FOMC Economic Projections
Inflation rate in Germany reached 2.5% in February on a yearly basis, which was lower from previous 2.9%, but still exactly in line with market expectation. Inflation rate on a monthly basis was standing at 0.4%.
For the last two weeks the currency pair was traded in anticipation of the Fed's rate cuts in the coming period, where USD was traded continuously lower, reaching the level of 1.096 against euro. However, since the US inflation data were published, the USD gained in value, considering that the market is now anticipating that the Fed will be reluctant to cut rates during the course of this year, so it might be postponed for some later period. The USD gained again, and the currency pair ended the week at 1.088. The RSI is still not ready to pass the line of the 50, and start its move toward the oversold market side. It ended the week at level of 53. Moving average of 50 days is moving quite close to its MA200 counterpart, indicating that the cross might come in a relatively short period of time.
It should be considered that in the week ahead the FOMC meeting is scheduled, as well as FOMC economic projections. This will be closely watched by the markets, in which sense, some higher volatility is quite possible. Based on current charts, the support line at 1.08 has not been clearly tested during the previous week, which leaves some space to the market to test it in the week ahead. Also, on the opposite side, there is equal probability for a move toward 1.09 and above.
Important news to watch during the week ahead are:
Euro: Core Inflation Rate y/y final for February for the Euro Zone, ZEW Economic Sentiment Index for March for the Euro Zone and Germany, HCOB Manufacturing PMI Flash for March for Germany, ECB General Council Meeting, Ifo Business Climate in March for Germany.
USD: Building Permits preliminary for February, FED Interest Rate Decision, FOMC Economic Projections
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