EUR/USD holds on to 1.1300 on steady CPI, focused on US data

  • The pair sticks to daily gains above the 1.1300 handle.
  • EMU final March CPI came in at 1.4% YoY.
  • Trade Balance, Beige Book next on tap across the pond.

The firm note around the European currency remains well and sound on Wednesday, with EUR/USD hovering over the 1.1320 region, just pips below daily highs.

EUR/USD unchanged on CPI data

Spot keeps the familiar range intact today after final inflation figures in Euroland for the month of March matched the preliminary readings today. In fact, headline CPI rose 1.4% from a year earlier and prices stripping food and energy costs gained 0.8% over the last twelve months.

Further data in the region saw the trade deficit widening to €17.9 billion during February, coming in above expectations.

In the meantime, the pair is so far extending the rebound from earlier weekly lows in the 1.1280/75 band, boosted by positive news from the Chinese calendar, where the GDP and Industrial Production surprised markets to the upside.

Across the pond, February’s Trade Balance figures are due next seconded by Wholesale Inventories, the EIA’s weekly report on US crude oil stockpiles and the Fed’s Beige Book. Additionally, Philly Fed P.Harker (2020 voter, hawkish) and St.Louis Fed J.Bullard are also due to speak later in the NA session.

What to look for around EUR

Positive sentiment in the risk-associated complex gave fresh oxygen to the shared currency in recent sessions and remains the exclusive driver of the price action for the time being. Recent ECB headlines noted the Council appears unconvinced of a rebound in the second half of the year, feeding into the already ongoing concerns that the slowdown in the region could last longer that expected and the central bank is therefore likely to remain ‘neutral/dovish’ for the foreseeable future (say until mid-2020?). On the political front, headwinds are expected to emerge in light of the upcoming EU parliamentary elections and the swelling presence of the populist option among voters.

EUR/USD levels to watch

At the moment, the pair is gaining 0.31% at 1.3115 and a breakout of 1.1337 (200-week SMA) would target 1.1344 (100-day SMA) en route to 1.1419 (high Feb.14). On the flip side, initial contention emerges at 1.1269 (21-day SMA) seconded by 1.1183 (low Apr.2) and finally 1.1176 (low Mar.7).

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