Forex markets where at attention yesterday as the worlds two most important central banks had statements, announcements and minutes of meetings to be digested. A few hours later and we are very much “as we were”.
EURUSD has been plying a narrow range in the upper 1.1200s, matching yesterday’s 12-day high at 1.1287. The pair had dropped by some 50 pips yesterday, which left a low at 1.1229, following downbeat remarks by ECB President Draghi following his post-policy meeting press conference, which was followed by perky US CPI data, though the Dollar retraced lower as markets digested that still-benign core CPI reading, which lifted EURUSD back into the upper 1.1200s. The Fed has thus pinned its dovish turn in large part on an outlook for soft inflation.
The final reading of Eurozone March HICP came in unrevised, at 1.4% y/y, as expected. Focus will now shift to today’s US PPI and jobless claims data releases, which are expected to be net bullish for the Dollar. Initial jobless claims are expected to rise 9k to 211k in the week ended April 6, from a 49-year low of 202k in the prior week. PPI is expected at a rate of 2.0% y/m in March, up from 1.9% in the month prior, with the core reading seen at 2.4% after 2.5% in February.
In the bigger picture, the pairing is in a bear trend, which has been unfolding since February last year, although downside momentum has abated notably in recent months. Support comes in at 1.1230, and resistance at 1.1300. “As you were!”
Head Market Analyst
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