EUR/USD Current price: 1.1797
- Soft EU inflation and political jitters in Italy undermined the common currency.
- US Treasury yields reached fresh multi-year lows, stabilizing nearby.
The common currency had quite a bad day, hit by weak core inflation in April and political jitters in Italy, which coupled with persistent dollar's demand to send the EUR/USD pair to a fresh 2018 low of 1.1763. The 5-Star Movement and League, the two Italian parties struggling to form a coalition government, were said to be planning to ask the ECB to forgive €250 billion of Italian debt, although the news was later denied by the League’s economic spokesman. He clarified that they are proposing that debt bought under QE by the ECB does not count in countries’ debt-to-GDP ratios. European inflation came in-line with market's forecast in April, up yearly basis 0.7%, well below ECB's target of close, but below 2.0%. While some analysts believe that this low inflation is due to temporary factors, still indicates a long way ahead before ECB's tightening. US data was mixed, helping the pair correcting higher intraday, although it was unable to advance beyond the 1.1820 level and later resumed its decline. April Housing Starts unexpectedly fell by 3.7%, while Building Permits also shrunk, but by less-than-expected, declining 1.8%. Industrial Production in the same month was 0.7% up although Capacity Utilization grew by less-than-expected, printing 78.0%.
Thursday will be a quieter day in terms of macroeconomic releases, as there are no relevant readings scheduled in Europe, while the US will offer the usual weekly unemployment data and the May Philly Fed Manufacturing Survey. In the meantime, equities shrugged off Tuesday's negative tone, while Treasury yields maintained the bid tone, with the 10-year note yielding 3.10% at one point in the day.
Now trading above the 1.1800 figure, the 4 hours chart indicates that the bearish strength is still strong, as the Momentum barely pared its decline within extreme oversold levels, while the RSI is posting a modest bounce from oversold readings, as the pair is far below all of its moving averages, which present sharp bearish slopes. Still, the short-term candle formation favors an upward correction, that will hardly be enough to revert the dominant bearish trend. Below the daily low, a more relevant support comes at 1.1740, December monthly low, with a break below the level increasing chances of a continued decline toward the 1.1660 region the next relevant support.
Support levels: 1.1765 1.1740 1.1710
Resistance levels: 1.1820 1.1850 1.1880
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.