The bullish tone around EUR/USD ran out of steam at a high of 1.1068, pushing it back below the 200-DMA at 1.1047 as the European stock markets opened on a positive note. Despite, the drop in banking stocks, the major European indices extended gains to trade at least 1% higher. Consequently, the EUR/USD pair weakened further to 1.1005 levels.
Later in the day, the US GDP and personal spending report is scheduled for release. The detail report on the same is available here.
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Eyes German CPI
The preliminary German CPI reading for February is expected to show the cost of living rose 0.5% m/m from January figure of -0.8%. This amounts to an annualized figure of 0.2%, which is well below the previous figure of 0.5%. A weaker-than-expected inflation could drive EUR lower to the rising trend line support, since it would increased the odds of a more aggressive ECB response in March. Markets are already expecting the bank to cut rates by another 10 basis points and expand the size of its stimulus program. On the other hand, a better-than-expected figure may not help EUR much as rally in equity markets would keep it under pressure.Later in the day, the US GDP and personal spending report is scheduled for release. The detail report on the same is available here.
Technicals – Rising trend line intact
- EUR’s failure to sustain above 200-DMA followed by a break below hourly 50-MA and a bearish daily RSI indicates the currency pair could drop to rising trend line support at 1.0960.
- On the higher side, the 200-DMA at 1.0947 could continue to act as a strong resistance.
- A daily close below 1.0960 would open doors for a sell-off 1.0845 (61.8% of 1.0517-1.1376).
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