German CPI Preview: What to Expect of EUR/USD?
The bid tone surrounding the EUR/USD pair weakened a bit over the last hours as the broad US dollar selling stalled. Although the prices kept range and now consolidates the upside around 1.1320 ahead of key macro releases from both continents.
German CPI expected to rise in March
Next on tap is the German inflation data due later in the session, with markets predicting CPI to rise 0.1% on a yearly basis in March, following a zero reading a month before. ON monthly basis, consumer prices are set to grow 0.6% versus 0.4% growth seen previously.
A better-than expected preliminary CPI report would ease ECB’s concerns over falling inflation expectations somewhat and would also suggest that the ECB’s rate cut move might be yielding results. Hence, the EUR is likely to benefit from a better CPI show this month and extend its rally versus the greenback to 1.14 handle.
A weaker-than-expected result could drive EUR/USD back below 1.1300 levels, although the downside may be short-lived as broad based USD sell-off on dovish Yellen is expected to gain further traction on expectations of a weaker US ADP report that will be published shortly after the German CPI release.
EUR/USD Technical Levels
Valeria Bednarik, Chief Analyst at FXStreet believes, “The pair´s technical picture is clearly bullish, with the price holding above 1.1300, a handful of pips below the mentioned high, but holding strong amid broad dollar's sell-off.”
“The 4 hours chart shows that the 20 SMA has turned sharply higher below the current level, while the technical indicators have accelerated their advances within overbought territory, maintaining the risk towards the upside. The pair has an immediate resistance at 1.1341, March 17th high, followed by 1.1375, the year high posted last February. Should the price extend beyond this last, there is scope to advance up to 1.1460, a major static resistance level. The immediate support, on the other hand, is 1.1285, with a break below it probably triggering a downward corrective movement towards the 1.1240 region.”
(Market News Provided by FXstreet)