- Euro falls modestly versus the US Dollar, but the trend still up.
- Crucial data ahead: Eurozone inflation and GDP; US Core PCE.
- EUR/USD continues to move above the uptrend line and 1.1000.
The EUR/USD is about to end flat on Thursday, after being able to hold above 1.1000. The trend is up, but the Euro faces strong resistance around 1.1060. Undecided markets favor slow moves around the pair, as traders await new data before a busy week, with the Federal Reserve (Fed) and the European Central Bank (ECB) meeting; and also the US official employment report.
The ECB is expected to deliver another interest rate hike next week. The question is how much: 25 or 50 basis points. Data due on Friday could be critical head of that meeting. Germany, France and Spain will release the preliminary April Consumer Price Index and Eurostat will publish the first Eurozone GDP estimate of the first quarter. While growth is expected to rebound marginally, inflation is forecast to rise in Spain, and to decline modestly in Germany. Those kinds of figures will keep the pressure on the ECB to curb inflation. Interest rate markets show the expected peak rate at 3.75%.
In the US, The Commerce Department on Thursday reported that real gross domestic product advanced 1.1% in the first quarter, below the 2% of markets consensus, and under the 2.6% of the fourth quarter. The Labor Department informed that Initial Jobless Claims fell unexpectedly in the week ended April 22 to 230,000. US yields rose sharply on Friday, reflecting risk appetite and probably also, expectations of more tightening from the Fed.
Inflation indicators of the GDP report surprised to the upside. On Friday, the Core Personal Consumption Expenditures Price Index (Core PCE) will be released. The Core PCE is Fed’s preferred inflation gauge. Those numbers will weigh on market expectations about what the central bank might do next week. So far, a 25 bps rate hike is expected, on what looks like the last move, before a large pause.
EUR/USD short-term technical outlook
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Not much has changed in EUR/USD over the last 24 hours, trading above the 20-day Simple Moving Average (SMA) at 1.0950 with the uptrend intact. However, the upside continues to be limited by 1.1060. A sustained consolidation above the mentioned area could pave the way for further gains to 1.1100 and more. However, if the pair remains below, there is an increasing likelihood of a deep correction.
The 4-hour chart shows the pair above an uptrend line, pointing to the upside. However, technical indicators are biased downward, suggesting more consolidation ahead for the Asian session. A slide under 1.0985 could increase selling pressure, and below 1.0955 a downward acceleration seems likely.
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