EURUSD has extended its year-to-date declines following Friday’s higher-than-expected US PCE Deflator data (the Federal Reserve’s favoured measure of inflation) which translated into broad-based US dollar strength.
Still, Euro bulls will be hoping to claw back some ground later this week:
Monday, February 27
Tuesday, February 28
Wednesday, March 1
Thursday, March 2
Friday, March 3
We get fresh inflation numbers out of the eurozone on Thursday with the headline reading expected to reveal a modest slowdown.
Here are the market forecasts for the February 2023 consumer price index for the Eurozone economy:
Note that the core print, which strips out volatile food and energy costs, was recently revised one-tenth higher to an all-time peak and is the key figure for policymakers.
Hence, if this week’s inflation data exceed the above-listed market forecasts, the Euro currency is expected to climb higher.
Euro gains are set to be predicated on bets that the European Central Bank will have to hike its benchmark rates higher than previously expected.
On that same day (Thursday, March 2nd), the minutes for the February ECB meeting are released and any chat from officials about the planned path for interest rates beyond March will be seized upon by markets.
Looking at the price charts …
The euro has lost support around the 38.2% Fibonacci level around 1.06 on the surging US dollar.
The next strong line of support may arrive around 1.04832 from the January 2023 cycle low. At the same time, euro bulls will be keeping their fingers crossed for a hotter-than-expected inflation print this week to try and send EURUSD clambering back above the 1.06 mark.
And from a technical perspective, EURUSD’s 14-day relative strength index (RSI) has fallen tantalisingly close to the 30 threshold which denotes “oversold” conditions.
Euro bulls will be hoping for a repeat of last year’s instances, whereby EURUSD enjoys a technical rebound when the RSI touches or submerges below that 30 mark.
Investors hope that peak concerns about the banking sector across both sides of the Atlantic are behind them.
29 March 11:25
With the big central bank meetings out of the way, this week brings with it the latest CPI data from the eurozone and focus on the Fed’s favoured inflation measure.
27 March 11:59
The dollar traded mixed against it peers in a narrow range yesterday and ahead of the pivotal FOMC rate decision later today. Investors have appeared a little more confident after the sharp selloff in risky assets early on Monday morning.
22 March 11:52
The European Central Bank is set to announce its rate decision at 13:15 GMT today (Thursday, March 16th). In short, EURUSD is perhaps likelier to react to market sentiment, rather than the fundamental actions of the ECB today.
16 March 11:14
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