EUR/USD flirting with the 1.1900 level as week draws to a close

  • EUR/USD has reverted back towards the 1.1900 figure from earlier session lows around the 1.1870 mark.
  • EUR/USD has traded as a function of rate differentials on Friday.
  • US PPI came in much hotter than expected, adding upside risk to next week’s CPI report.

EUR/USD has reverted back towards the 1.1900 figure from earlier session lows around the 1.1870 mark. The pair, which still trades lower on the day by about 15 pips or just over 0.1%, is likely to consolidate within its recent 1.1860-1.1920ish intra-day parameters over the next few hours as FX volumes drop ahead of the weekend. For now, the pair has managed to move back to the north of its 200-day moving average, which currently resides at 1.1885.

Driving the day

EUR/USD has traded as a function of rate differentials on Friday, moving lower in tandem with a rise in US government bond yields (when 10-year yields went as high as 1.68%) before rising from lows as US yields pulled back from highs (when 10-year yields dropped back to 1.65%). No major catalysts seem directly to be causing the choppy bond market conditions, though there are a few developments worth noting, particularly out of the US.

Firstly, the March Producer Price Inflation report for the month of March was released on Friday; the YoY rate of PPI was 4.2% in March (its highest since September 2011), a jump of 1.4% from February and well above expectations for a reading of 3.8%. The Core PPI was also higher than expected, rising to 3.1% YoY from 2.5% in February, above expectations for a 2.7% reading. According to ING, the latest PPI report adds upside risk to next week Consumer Price Inflation (CPI) report (also for the month of March).

They expect CPI to come in at 2.4% YoY in March, but then to rise towards 4.0% over the summer “as prices in a vibrant, re-opened, stimulus fuelled economy contrast starkly with those of twelve months before when the economy was largely in lockdown”. The bank disagrees with the Fed, who thinks that inflation will then moderate; “we think that pandemic-related scarring and supply constraints will keep inflation elevated for longer than they do”. ING conclude that “inflation could stay closer to 3% for much of the next couple of years and in an environment of strong growth and rapid job creation it adds to our sense that risks are increasingly skewed towards a late 2022 rate hike rather than 2024 as the Fed currently favours”.

Elsewhere, various Fed speakers have been on the wires on Friday, though not with much impact on FX markets. Fed Vice Chair Richard Clarida stuck to the usual dovish script and echoed Chairman Jerome Powell’s remarks on Thursday, saying that the Fed wants to see “actual” progress towards its goals before tightening policy. He also played down concerns about inflation, highlighting that while next week’s CPI inflation reading is likely to be high, this is likely a “transitory” increase in prices. However, he did add something new compared to what Powell has said on inflation, saying that if inflation has not declined by the end of the year, it may no longer qualify as transitory. On the recent labour market data, he welcomed the strength but reiterated the Fed’s stance that there remains a long way to go.

Elsewhere, one of the more hawkish Fed members Robert Kaplan also gave remarks. Kaplan noted lingering concerns about the impact of the Covid-19 and the dangers of variants, but said that once the pandemic storm has been weathered, he wants to err on the side of removing extraordinary policy measures sooner rather than later (i.e. by the sounds of it, Kaplan will be one of the soonest to push for QE tapering). For reference, Kaplan is one of the FOMC members predicting a rate hike by the end of 2022.

Looking ahead, the main event to focus on next week will be the US March Consumer Price Inflation report, though the US March Retail Sales report will also likely be a market mover. A few Fed speakers are also scheduled.


Today last price 1.1899
Today Daily Change -0.0014
Today Daily Change % -0.12
Today daily open 1.1913
Daily SMA20 1.1848
Daily SMA50 1.1974
Daily SMA100 1.2055
Daily SMA200 1.1894
Previous Daily High 1.1927
Previous Daily Low 1.1861
Previous Weekly High 1.1794
Previous Weekly Low 1.1704
Previous Monthly High 1.2113
Previous Monthly Low 1.1704
Daily Fibonacci 38.2% 1.1902
Daily Fibonacci 61.8% 1.1886
Daily Pivot Point S1 1.1873
Daily Pivot Point S2 1.1834
Daily Pivot Point S3 1.1807
Daily Pivot Point R1 1.194
Daily Pivot Point R2 1.1967
Daily Pivot Point R3 1.2007



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.

Feed news

Are you new to trading or have been trading for a while and you feel stuck?

Try with us!
Become Premium!

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD depressed near a fresh weekly low at 1.2065

EUR/USD lost the 1.2100 mark with US inflation data, holding near its daily lows as demand for high-yielding assets receded. The greenback has room to continue rallying.


GBP/USD extends slump sub-1.4100 as dollar rallies

GBP/USD has  extended its decline after US CPI beat estimates with 4.2% while Core CPI came out at 3%. Earlier, UK GDP beat expectations with -1.5%. Volatility is rising.


XAU/USD tests $1,820 as USD capitalizes on US CPI data

The XAU/USD pair fluctuated wildly in the early American session as investors assessed the latest inflation report from the US. After spiking to a daily high of $1,843, the pair reversed its direction and dropped to $1,820 area.

Gold News

BTC may drop to $34,000, taking the rest of the market with it

Bitcoin price defining a bearish top formation after weeks of indecision. Ethereum price blitzes bears with steady price momentum. Ripple price fails pattern test, poised for further losses.

More Crypto News

Inflation and the dollar: Is the connection as direct as it seems?

US inflation soared in April and so did market volatility. Treasury rates rose, the dollar followed and equities dropped for a second day.  The Fed insists prices increases are temporary but behind the pandemic base effect commodity prices are sharply higher and wages are rising. 

Read more