EUR/USD starts the week on the back foot as Eurozone data keeps disappointing while US inflation came in-line with forecast.
The EUR/USD bears want to keep the pair below the 1.2100 handle and a hawkish FOMC on Wednesday would likely send the pair past the 1.2000 level.
EUR/USD is trading at around 1.2076 down 0.45% as the New-York forex session is slowly coming to an end.
The EUR/USD started the week on the back foot as the German Harmonized Index of Consumer Prices year-on-year to April decelerated to 1.4% versus the 1.5% expected by analysts. On the other hand, tier-one inflation data from the United States came in-line with market’s forecast. The Core Personal Consumption Expenditure price index came in at 1.9% matching consensus. The status quo is maintained with the pattern of disappointing macroeconomic data from the Eurozone and relatively good data from the US.
Earlier in the session the Chicago Purchasing Managers Index, Pending Home Sales and the Dallas Fed Manufacturing Business Index for April all came below expectations. However, these are not game changers and the market is shifting its attention to the FOMC meeting on Wednesday. Investors will gauge if whether or not a rate hike is coming in June. If the Fed expresses doubts blaming market conditions and rising yields to delay rates, then market participants might dump the US dollar. On the other hand, if the Fed is upbeat on the economy and telegraph that they have the intention to pull the trigger in June, the greenback will most likely continue its bull trend. The US Dollar Index (DXY) is trading at 3.5-month highs. It is also worth mentioning that the US data is not impacting the USD as much as in the last weeks as market participants will now need the widely awaited confirmation of a rate hike in June on Wednesday’s FOMC.
Coming up on Tuesday is the US Manufacturing Purchasing Managers Indexes from both, Markit and ISM. However, there is no data coming from the Eurozone as the market will be closed due to Labour Day. However, UK stock markets will be open.
EUR/USD daily chart
The medium-term trend is bearish. Immediate support is seen at 1.2054 (Friday’s low), followed by the 1.2000 figure and next at 1.1915 swing low. On the other hand, resistances are priced in at 1.2100 figure, 1.2130 (Friday’s high) and 1.2200 figure.
The post EUR/USD starts the week on the back foot, sub 1.2100 handle appeared first on CIX Markets.