- As investors shrugged off banking crisis woes, EUR/USD gained traction above 1.0700.
- PPI in German was mixed, with annual reading shooting above 15%< while MoM data shrank.
- EUR/USD: Bullish in the near term but needs to clear 1.0760, to extend its gains.
The EUR/USD breaks the 1.0700 barrier and climbs 0.50% after hitting a daily low of 1.0631. An improvement in market mood and European Central Bank (ECB) speakers lend a hand to the Euro (EUR), while the US Dollar (USD) continues to weaken across the board. At the time of writing, the EUR/USD is trading at 1.0720.
Germany’s PPI and ECB speaking among the factors boosting the Euro
Market sentiment improved after UBS bought its Swiss rival Credit Suisse. The financial market turbulence has spurred speculations that global central banks could pause the pace of tightening. However, traders expect a 25 bps rate hike by the Federal Reserve (Fed) on Wednesday. The CME FedWatch Tool odds for a quarter of a percentage point lift at 73.10%.
The EUR/USD price action has been driven by ECB speakers. The President of the ECB, Christine Lagarde, said that inflation is expected to continue excessively high for a more extended period. She added that there’s no trade-off between inflation and financial stability, and without tensions, the ECB would’ve indicated that additional rate hikes were required.
At around the same time, ECB’s Stoumaras commented the ECB would not give more forward guidance and said that meetings would be data dependant.
Earlier, Germany’s inflation in the producer side, known as the Producer Price Index (PPI), contracted -0.3% MoM, less than estimates of -0.5%. Annually basis, the PPI jumped 15.45, above forecasts of 14.5%.
Aside from this, last Friday’s US economic data revealed that Industrial Production experienced a -0.2% YoY decrease, marking the first contraction in the past year. The monthly reading was 0%, lower than the estimated 0.2%. Additionally, Consumer Sentiment in the US, as measured by the University of Michigan (UoM), decreased from 67 in February to 63.4 in March, the first drop in four months.
The US Dollar Index, a measure of the buck’s value, extended its losses to 0.44%, down at 103.417, a tailwind for the EUR/USD. US Treasury bond yields are recovering but failing to underpin the greenback.
EUR/USD Technical analysis
The EUR/USD has printed three consecutive bullish candles, though it remains shy of testing last week’s high of 1.0759. The daily chart suggests a triple bottom is in place, though it would need to reclaim the latter to confirm its validity. That would pave the way for a rally towards the YTD high of 1.1032, but firstly, traders need to clear the February 14 at 1.0804 before aiming towards 1.1000. Conversely, a fall below the 100 and 200-day EMAs, around 1.0545/1.0569, would shift the EUR/USD bias to bearish.
What to watch?
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
AUD/USD jumps above 0.6500 after hot Australian CPI data
AUD/USD extended gains and recaptured 0.6500 in Asian trading, following the release of hotter-than-expected Australian inflation data. The Australian CPI rose 1% in QoQ in Q1 against 0.8% forecast, providing extra legs to the Australian Dollar upside.
USD/JPY hangs near 34-year high at 154.88 as intervention risks loom
USD/JPY is sitting at a multi-decade high of 154.88 reached on Tuesday. Traders refrain from placing fresh bets on the pair as Japan's FX intervention risks loom. Broad US Dollar weakness also caps the upside in the major. US Durable Goods data are next on tap.
Gold price cautious despite weaker US Dollar and falling US yields
Gold retreats modestly after failing to sustain gains despite fall in US Treasury yields, weaker US Dollar. XAU/USD struggles to capitalize following release of weaker-than-expected S&P Global PMIs, fueling speculation about potential Fed rate cuts.
Crypto community reacts as BRICS considers launching stablecoin for international trade settlement
BRICS is intensifying efforts to reduce its reliance on the US dollar after plans for its stablecoin effort surfaced online on Tuesday. Most people expect the stablecoin to be backed by gold, considering BRICS nations have been accumulating large holdings of the commodity.
US versus the Eurozone: Inflation divergence causes monetary desynchronization
Historically there is a very close correlation between changes in US Treasury yields and German Bund yields. This is relevant at the current juncture, considering that the recent hawkish twist in the tone of the Fed might continue to push US long-term interest rates higher and put upward pressure on bond yields in the Eurozone.