Eur/usd falls as german inflation metrics lower, us chicago pmi rises

EURUSD Analysis

Performance after Monday
Period	Pct	Chg	Momentum
Monday	-0.16%	-16.8 Pips
Week to-date	-0.17%	-18 Pips
March	4.06%	422.3 Pips

Upcoming key events (London Time)

Tue 10:00 AM EUR Core Harmonised Index of Consumer Prices (HICP) (12-mth)
Tue 01:30 PM EUR European Central Bank’s President Christine Lagarde speech

What happened lately

In the United States, the Chicago Purchasing Managers’ Index saw an uptick in March, climbing to 47.6 points from February’s 45.5 points. This increase suggests a slight improvement in business conditions in the Chicago area, reflecting a more optimistic outlook from purchasing managers. The improvement, while modest and still below the 50-point threshold that signifies expansion, indicates a potential stabilization or slight growth in economic activities within the region.

In Germany, a series of inflation metrics have shown a decrease for March. The Consumer Price Index (CPI) inflation rate dropped to 0.3% from 0.4% over the previous month, and on an annual basis, it fell to 2.2% from February’s 2.3%. Similarly, the Harmonised Index of Consumer Prices (HICP) also declined, registering a March decrease to 2.3% annually, down from 2.6% in February. These figures suggest cooling inflationary pressures in the German economy, which could influence monetary policymakers at the European Central Bank. On a positive note, Germany’s retail trade turnover exhibited notable growth, with a 12-month increase of 4.9% in February, as revised from an earlier figure of 3.3%, and on a monthly basis, retail trade increased to 0.8% from 0.2% in January. This upward trend indicates stronger consumer spending, potentially supporting economic growth.

The news could potentially affect the EURUSD exchange rate by maintaining the current consolidation pattern, especially given the recent downturn despite the Euro’s rise in March. The combination of stable business conditions in the US and cooling inflation in Germany provides mixed signals. The reduced inflationary pressure in the Eurozone may relieve the European Central Bank from imminent rate hikes, potentially weakening the Euro if US data improves more swiftly, though the stronger German retail trade figures suggest resilience in consumer demand. Investors will be closely monitoring upcoming European Central Bank updates, including Christine Lagarde’s speech, which could further provide market direction, influencing the Euro’s movement against the Dollar depending on the tone and indications regarding future monetary policy.

Latest from X (Twitter)

Tweets by Eurostat

What can we expect from EURUSD today?

EURUSD on Monday dropped -0.16% to 1.08174. Price is above 9-Day EMA while Stochastic is rising.

Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.07843 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.08494 or trades above daily pivot 1.08168. Break above could target R1 at 1.085. While to the downside, we are looking at 1.07843 (S1) and daily low of 1.07837 as support levels. EURUSD need to break on either side to indicate a short-term bias. A close below 1.07837 would indicate selling pressure.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

EURUSD ended month of March trading session up by 4.06% or 422.3 pips higher.

Key levels to watch out:

#EURUSD Trending on Twitter

[custom-twitter-feeds hashtag=”#EURUSD” num=3 showheader=false]