EUR/USD: pending inflation data and retail sales in the US

12 May 2017, 12:17
Yuri Papshev

Trading recommendations

Sell ​​Stop 1.0835. Stop-Loss 1.0880. Goals 1.0820, 1.0800, 1.0780, 1.0700, 1.0630

Buy Stop 1.0880. Stop-Loss 1.0835. Goals 1.0895, 1.0950, 1.1000, 1.1050

Today in Germany came preliminary data on GDP for the first quarter and consumer price indices for April, generally coincided with the forecast. Consumer prices rose in April by 2.0% (in annual terms), GDP growth was 1.7% (in annual terms). Euro slightly decreased by the data presented.

The US dollar continues to hold positions in the foreign exchange market. After the main world central banks announced that they intend to adhere to a soft monetary policy, the Fed is giving numerous signals for a high probability of an early interest rate hike. Thus, the president of the Federal Reserve Bank of Boston, Eric Rosengren, stated earlier in the week that "three increases in rates are justified during the current year, provided that the economy will grow according to forecasts". Higher rates support the dollar, making US assets more attractive to investors.

At 12:30 (GMT), it is planned to publish key data on inflation and retail sales in the US for April. The forecast: + 0.6% (against -0.2% in March) and + 0.3% (against -0.3% in March), respectively. Positive inflation indicators will increase the likelihood of an increase in interest rates of the Federal Reserve System.

While the pair EUR / USD is trading above the key support level 1.0820 (200-period moving average on the daily chart), its positive dynamics persists. The risks of the return of the medium-term negative dynamics may increase if the pair EUR / USD falls below the support level 1.0780 (144-period moving average on the daily chart). The indicators OsMA and Stochastic on the daily chart were turned to short positions.

An alternative scenario for resuming the growth of the EUR / USD pair will become relevant if the EUR/USD pair returns to the zone above the resistance level 1.0895.

Support levels: 1.0850, 1.0820, 1.0800, 1.0780, 1.0700

Levels of resistance: 1.0875, 1.0895, 1.0950, 1.1000, 1.1050

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*)presented material expresses the personal views of the author and is not a direct guide to conduct trading operations. 

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