US inflation slows against the Eurozone’s

In addition to the Eurozone investor confidence survey improving in April after falling the previous month, Eurozone industrial output in February rose 1.5%, exceeding the 1.0% month-on-month forecast and 2.0% above the 1.5% year-on-year forecast, according to Eurozone economic figures released by Eurostat on Thursday. This was mostly due to increased manufacturing of both durable and non-durable consumer products.

On Wednesday, the European Central Bank (ECB) confirmed that it will continue to hike interest rates at its May meeting. But, the right rate has yet to be determined due to vulnerabilities from last month's financial sector instability, as well as the effect of previous interest rate hikes that have not yet been fully passed on to the economy. This makes the current moment critical for considering the optimal monetary policy direction. As policymakers in each EU member country debate interest rates ranging from 0.25% to 0.50%.

Overall Eurozone inflation, though, remains high. Core inflation, which excludes volatile food and energy prices and is a reliable indicator of the medium-term inflation outlook, reached a new high of 5.7% last month. And it is projected to rise for several more months, signaling sticky price growth or inflation. Meanwhile, headline inflation will continue to slow as a result of decreased energy prices, and wage growth will continue to be a major issue for the Eurozone as the labor market remains tight.

The US dollar currency pair plummeted to a two-month low on Thursday, leading the euro to rise to a two-month high after data indicated that US inflation slowed substantially in March, bolstering hopes that the Federal Reserve might stop raising interest rates in May.

The US Consumer Price Index (CPI) was 5% year on year in March, down from 6% in February, according to data released on Wednesday. Whereas core inflation increased from 5.5% to 5.6% in the prior month. The Producer Price Index (PPI) increased by 2.7%, less than the 3% projected.

Inflation in the US service sector appeared to be declining. Although rents remain high, they have risen at the slowest rate in nearly a year. The food price has not increased and remains the lowest since November 2020. While the latest number of US jobless claims rose to 239,000 last week, higher than the 232,000 projected.

Although the Fed may postpone the next rate hike, concerns about persistently high core inflation and strong economic growth reflected in the futures market indicate a high probability of about 70% that the Fed will raise interest rates by 25 basis points in May, with a 30% chance of keeping interest rates steady if no financial sector factors intervene. While the Fed's December terminal rate prediction of 5.1% in 2023 remains unchanged. As a result, the euro may be in a certain uptrend and may decline along the support line to stabilize, as traders await the release of April inflation data and the findings of the ECB's quarterly bank lending survey in early May.

Data for Technical Analysis (5H) CFD EUR/USD

Resistance : 1.1058, 1.1062, 1.1067

Support : 1.1048, 1.1044, 1.1039          

5H Outlook

1H Outlook

Source: Investing.com                                                 

Buy/Long 1 If the support at the price range 1.1043 - 1.1048 is touched, but the support at 1.1048 cannot be broken, the TP may be set around 1.1061 and the SL around 1.1040, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 1.1058 - 1.1063, TP may be set around 1.1073 and SL around 1.1045, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 1.1058 - 1.1063 is touched, but the resistance at 1.1058 cannot be broken, the TP may be set around 1.1047 and the SL around 1.1066, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 1.1043 - 1.1048, TP may be set around 1.1036 and SL around 1.1061, or up to the risk appetite.       

Pivot Points Apr 14, 2023 01:08AM GMT

Sources: Investing 1, Investing 2