- US Dollar ends positive streak ahead of key US consumer inflation data.
- EUR/USD keeps bullish bias, looks limited and vulnerable to corrections while under 1.1000.
- Ahead of the Asian session, more gains seem likely above 1.0930.
The EUR/USD rebounded from weekly lows as Europe returned from the Easter holiday, trimming Monday’s losses. The pair rose above 1.0900 and more, boosted by a weaker US Dollar ahead of critical US economic data and amid expectations of another rate hike from the European Central Bank (ECB).
Data released on Tuesday showed Eurozone Retail Sales dropped 0.8% in March as expected, and the annual rate worsened to -3% from -1.8%, but it was better than the consensus of -3.5%. The next relevant report of the region will be on Thursday with Industrial Production. Tightening expectations from the ECB point to a 25 basis points rate hike at the May 4 meeting.
Federal Reserve’s Goolsbee mentioned on Tuesday they need to assess the potential impact of financial stress on the real economy while Williams said that if inflation comes down, they will have to lower interest rates. US yields rose on Tuesday but did not help the US Dollar, which was affected by an improvement in risk sentiment.
Attention is set on the March US Consumer Price Index that will be released on Wednesday. The CPI is seen rising by 0.3% and the Core by 0.4% in March on a monthly basis. Later that day, the Fed will publish the minutes of the latest FOMC meeting.
US CPI Preview: US Dollar on the back foot and poised to fall further
EUR/USD short-term technical outlook
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The EUR/USD peaked on Tuesday at 1.0927 and then pulled back finding support above 1.0900. Ahead of the Asian session, risks look titled to the upside. The immediate resistance is the 1.0930 area. A break higher would target 1.0950. Above comes the monthly high at 1.0972, the last defense to a test of 1.1000. On the 4-hour chart, the immediate support is seen at 1.0895, a slide below would weaken the Euro. The next support stands at 1.0860, followed by 1.0830.
The daily chart shows the upside bias intact, despite the recent negative streak. The 20-period Simple Moving Average (SMA) awaits at 1.0815, a close below would favor an extension of the correction. On the upside, the Euro needs to break soon the 1.1000 level to open the door to more gains.
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