- EUR/USD: bulls back in charge within weekly consolidation range.
- EUR/USD: bulls await the retail sales for another attack through the 1.24 handle.
EUR/USD has rallied and fallen just shy of the 1.24 handle where 1.2320 now comes as a key support within this weekly consolidation phase between 1.2150 and 1.2555, (near-term upside target through 1.2440).
EUR/USD has been in the consolidation of 2017 Nov's rally to aforementioned highs where markets had been expecting the ECB to be playing catch up with the Fed in the early part of 2018 where traders began to unwind long dollar and overvalued positions.
Typically, the dollar will tail off during the Fed's tightening cycle after an initial bid and this may be signalling that there is more downside to come in the greenback for the year ahead,(especially should the ECB be seen to tighten their own policy as soon as this fall), despite three further rate hikes in 2018 from the Fed.
So what now?
Apart from the Whitehouse and Tillerson noise, the CPI data was not an upside surprise, more of a Goldilocks result and hence the dollar was sold off, down -0.22% on the day so far in DXY where the 10yr yields are now -0.57% at the time of writing. CPI showed headline consumer prices rising at an annualized 2.2% during February and 0.2% inter-month, but, taking out food and energy costs, CPI only rose 1.8% year/on year and by just 0.2% on a monthly basis vs 0.3% prior, and that is where the markets have started to discount a fourth or even a third rate hike in 2018 when coupled to the disappointment in the nonfarm payrolls wages data last Friday.
DXY underwater on nonfarm payrolls, but, watch the Libor/ OIS spread
Elsewhere, which also weighs on the greenback, are the OECD economic projections that were revised upwards. The pace of expansion over the 2018-19 period is expected to be faster than in 2017, (but tensions are appearing that could threaten strong and sustainable medium-term growth. The UK is expected to see the slowest growth rate among G20 in 2018/2019).
Eyes are now set on this week's retail sales and a disappointment there could spell real danger for the short term dollar bulls and open up the key 1.2550 target further.
EUR/USD levels
The technical outlook is bullish with RSIs heading higher and with the price holding above the important 50-D SMA at 1.2285. However, a break there opens risk to 1.22 the figure / 1.2180. To the upside, 1.24 the figure and 1.2440 are in focus. On the wide, the 2008-2018 resistance line is located at 1.2680 ahead of a wider 1.3190 as being the 50% retracement of the move down from 2008.
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
USD/JPY holds above 155.50 ahead of BoJ policy announcement
USD/JPY is trading tightly above 155.50, off multi-year highs ahead of the BoJ policy announcement. The Yen draws support from higher Japanese bond yields even as the Tokyo CPI inflation cooled more than expected.
AUD/USD extends gains toward 0.6550 after Australian PPI data
AUD/USD is extending gains toward 0.6550 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price keeps its range around $2,330, awaits US PCE data
Gold price is consolidating Thursday's rebound early Friday. Gold price jumped after US GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the Fed could lower borrowing costs. Focus shifts to US PCE inflation on Friday.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
Bank of Japan expected to keep interest rates on hold after landmark hike
The Bank of Japan is set to leave its short-term rate target unchanged in the range between 0% and 0.1% on Friday, following the conclusion of its two-day monetary policy review meeting for April. The BoJ will announce its decision on Friday at around 3:00 GMT.