EUR/USD – Euro Under Pressure as German Inflation Misses Estimate

Kenny Fisher MarketPulse

EUR/USD has lost ground in the Friday session. Currently, the pair is trading at 1.2299, down 0.40% on the day. On the release front, there are no major events. German PPI improved to 0.1%, but this fell short of the estimate of 0.2%. Later in the day, the eurozone releases consumer confidence, which is expected to remain at zero for a third straight month.

The German and eurozone economies have been performing well in 2018, but inflation levels remained low in March. German PPI improved from -0.1% to 0.1%, but missed the estimate of 0.2%. Final CPI came in at 1.3%, up from 1.1% a month earlier. Still, the reading fell short of the estimate of 1.4%. With inflation well below the ECB inflation target of around 2%, there is little pressure on the ECB to tighten its accommodative monetary policy. The ECB’s stimulus program is scheduled to wind up in September, but an increase in interest rates is unlikely before 2019.

Investors are keeping a close eye on the ECB, which meets next week for a policy meeting. Despite stronger economic conditions in the eurozone, the ECB has been in cautious mode. At the March meeting, policymakers took a small step, dropping a pledge to increase stimulus if needed. Will we see additional ‘baby’ steps at the April meeting? The markets are not expecting any change in forward guidance, and concerns over recent trade disputes could mean a dovish statement from ECB President Mario Draghi. Traders shouldn’t expect any dramatic moves next week, as the bank will likely continue to preach patience and prudence.

EUR/USD Fundamentals

Friday (April 20)

2:00 German PPI. Estimate 0.2%. Actual 0.1%
All Day – OPEC-JMMC Meetings
7:30 German Buba President Weidmann Speaks
10:00 Eurozone Consumer Confidence. Estimate 0 points
11:15 US FOMC Member John Williams Speaks

Open: 1.2346 High: 1.2353 Low: 1.2295 Close: 1.2299

EUR/USD Technical

S1	S2	S1	R1	R2	R3
1.2025	1.2092	1.2235	1.2319	1.2460	1.2581

EUR/USD showed little movement in the Asian session and has lost ground in European trade

1.2235 is providing support
1.2319 has switched to a resistance line after losses by EUR/USD

Further levels in both directions:

Below: 1.2235, 1.2092 and 1.2025
Above: 1.2319, 1.2460 and 1.2581
Current range: 1.2235 to 1.2319

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

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