German CPI Preview: What to Expect of EUR/USD?
The bid tone surrounding the EUR/USD pair
strengthened over the last hours as upbeat macro data from Germany and
Eurozone boosted the sentiment around the EUR. While continued broad
based US dollar selling backed by the BOJ fall-out, also helps keep the
major near weekly tops above 1.1350 levels.
Soft regional CPI readings point to a weaker nationwide print
Next of note for main currency pair is the German inflation data due later in the session, with markets expecting price pressure to ease to 0.2% on a yearly basis in March, a slight slowdown from the 0.3% rate booked in February. On monthly basis, the prices are seen dropping 0.1%, sharply down from a 0.8% increase seen previously.
Germany's regional CPIs released earlier today also paints a weaker picture of the harmonized German CPI report, with Brandenburg inflation for the month of April MoM coming in at -0.3% vs +0.9% prev, while the YY was -0.2% vs 0.0% prev. In Hesse, MoM stood at -0.2% vs +0.8% prev, with YoY at -0.1% vs +0.15 prev. Meanwhile, in Bavaria, the MoM came at -0.1% vs +0.8% prev, with YoY at +0.2% vs +0.3% prev.
However, the German data is expected to have limited impact on the EUR/USD pair, as the main risk event for the major this Thursday is expected to be the first estimate of the US Q1 2016 GDP due shortly after the German CPI report.
EUR/USD Technical Levels
Valeria Bednarik, Chief Analyst at FXStreet notes, “From a technical point of view, the pair presents a mild positive tone, as the price is near its weekly high of 1.1367 and above its moving averages, with the 20 SMA heading sharply higher well below the current level in the 4 hours chart. In the same time frame, the technical indicators hold in positive territory, but lacking directional strength. The pair needs to accelerate beyond the 1.1380 region to extend its gains today, with the next short term resistances at 1.1420 and 1.1460.
A strong support is now in the 1.1310/20 region, with a break below it indicating a continued decline down to the 1.1270 region.”