Eur/usd - page 433
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Germany Slips Into Deflation in April: CPI
The CPI in Germany declined in April on an annual basis, falling to a red path for the first time since January 2015, the latest final CPI report from Destatis confirmed on Friday.
Consumer prices dropped 0.1% in April year-on-year, in line with market's prediction, while coming in worse than the preliminary 0.1% increase. In March, consumer prices rose 0.3% year-on-year.
The prices of goods (total) fell by 1.0% in April 2016 compared with April 2015, mainly due to a decrease in energy prices. Other price decreases were recorded for coffee, tea and cocoa (-3.3%) and articles and products for personal care (-2.1%). Prices were considerably up for some goods, for example, jewelery, clocks and watches (+4.8%) and tobacco products (+4.3%).
On a monthly basis, the CPI fell 0.4% in the fourth month of the year, after April's preliminary reading showed a drop of 0.2% in the country's consumer prices month-on-month.
The CPI measures the movement of the overall price level, and it is measured on consumer baskets based on a sample of goods and services paid for by the population, while the central bank's target rate for CPI is usually set at the level of 2%.
Furthermore, it is one of the three most important indicators for further central bank moves, along with the unemployment rate, the GDP and other macroeconomic indicators.
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Yesterday EURUSD fell with a narrow range, creating an inside day and closed near the low of the day, however closed within the previous day range, being slightly on the bearish side of neutral.
The pair is trading below the 10-day moving average that is acting as a dynamic resistance although is still trading above the 50 and the 200-day moving averages that act as a dynamic support.
The key levels to watch are: Daily resistance at 1.1556, other daily resistance at 1.1459, the 10-day moving average at 1.1426 (resistance), the 50-day moving average at 1.1330 (support) and a daily support at 1.1237.
On Thursday session EUR/USD was trading slightly lower and earlier this morning hit 1.1366. Although there’s no substantial downtrend and generally the pair moves sideways without clear direction from Monday, the bearish scenario still effects with closest target around 1.1275 - 1.1200. Immediate resistance is located at 1.1450 and 1.1500.
The EUR/USD fell 0.22% to 1.1350.
EUR/USD Weekly Outlook: Focus on US Inflation in Days Ahead
The European calendar starts on Wednesday with the euro zone's CPI figures for April. Inflation is projected do decelerate both on the monthly and yearly basis. The core inflation should stay at 0.7% year-on-year.
On Thursday, French labor market for the first quarter are due during the morning, which will be followed by the euro zone's current account for March. The big surplus of the current account currently supports the euro on currency markets.
As previously mentioned, there are not many US macro news. Tuesday will bring inflation data for April, with the headline CPI number expected to accelerate higher, which should support the greenback. Moreover, the core CPI is expected to improve in April as well.
These data will be followed by housing starts and building permits for April and both these are projected to swell from previous levels. In addition, capacity utilization and industrial production will be published.
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I believe that the support is now located at the level of 1.1283, the low of Friday's trading, and resistance is likely to make the level of 1.1448 - Wednesday's maximum.