EUR/USD. April 13th. The euro is already at 1.1000 and US inflation is falling at a high rate
April 13, 2023 10:22 am
On Wednesday, the EUR/USD pair continued to rise towards the 1.1000 level. The rebound of quotes from this level will benefit the U.S. dollar, with some declines in the direction of the corrective level of 76.4% (1.0917). Fixing the pair’s exchange rate above 1.1000 will enhance the likelihood of further growth toward the Fibonacci level of 1.1035.
Yesterday, the U.S. dollar experienced another decline. The background information could have been more extensive, but it was strong. In March, the United States consumer price index decreased from 6.0% to 5.0% year-over-year. In contrast, the fundamental indicator rose from 5.5% to 5.6%. However, because it decreased by 1%, traders only paid attention to the first indicator. After this report, bull speculators became more active, which is also reasonable. Recently, the market has received numerous rumors and statements from major institutions indicating that the Federal Reserve may not raise interest rates in May. If inflation declines rapidly, the U.S. regulator does not need to rush to implement a new PEPP tightening.
Consequently, following yesterday’s report, the probability of a rate hike in May fell below 50%, and the U.S. dollar resumed its decline. Now it would be very helpful to learn the status of European inflation, which has also slowed down significantly, according to the most recent report. Nonetheless, it is higher in the European Union than in the United States, and it is too soon for the ECB to consider not tightening the PEPP. I do not doubt that the ECB will raise rates again in May, giving the European currency new grounds to continue rising. Both central banks are nearing the end of the process of rate hikes, but the ECB began raising its rates later, so it may have to conclude later. Bullish speculators may continue to dominate the market for some time.
On the 4-hour chart, the pair has established itself above the side corridor, allowing traders to anticipate continued growth toward the corrective level of 61.8% (1.1273). Above the corrective level of 50.0% (1.0941), consolidation was also feasible, increasing the likelihood of further growth. Similarly, the “bullish” divergence of the CCI indicator benefited the euro. There are currently no new divergences brewing.
Report on Commitments of Traders (COT):
During the previous reporting week, 2498 long contracts and 4130 short contracts were opened by speculators. Overall, the sentiment of significant traders remains “bullish” and continues to improve. The total number of long contracts held by speculators is now 225 thousand, and the number of short contracts is 82 thousand. The European currency has been rising for over six months, but the number of long contracts among professional speculators has remained unchanged over the past few weeks. After a long “black period,” the euro’s situation remains favorable, so its prospects remain positive. At least until the ECB gradually increases the interest rate by 0.50%. However, the market sentiment may turn bearish in the near future, as the ECB cannot continue to raise the rate by a half-percentage point, and the rate may drop to 0.25% in May. There are sell indicators on both graphs.
News calendar for the United States and Europe:
Germany – consumer price index (CPI) (06:00 UTC).
E.U. – volume of industrial production (09:00 UTC).
U.S. – producer price index (PPI) (12:30 UTC).
U.S. – number of initial applications for unemployment benefits (12:30 UTC).
The economic events calendar for April 13 contains several intriguing entries but nothing of comparable significance to yesterday’s inflation report. Today, the impact of the information context on speculators’ sentiment will be minimal.
EUR/USD forecast and trading suggestions:
On the hourly chart, sales can be initiated when the pair rebounds from the 1.1000 level with a target of 1.0917. On the 4-hour chart, purchases were feasible when the price closed above 1.0941 with targets of 1.0000 and 1.1035. The first one has been developed.
The material has been provided by InstaForex Company – www.instaforex.com
On Wednesday, the EUR/USD pair continued to rise towards the 1.1000 level. The rebound of quotes from this level will benefit the U.S. dollar, with some declines in the direction of the corrective level of 76.4% (1.0917). Fixing the pair’s exchange rate above 1.1000 will enhance the likelihood of further growth toward the Fibonacci level of 1.1035.
Yesterday, the U.S. dollar experienced another decline. The background information could have been more extensive, but it was strong. In March, the United States consumer price index decreased from 6.0% to 5.0% year-over-year. In contrast, the fundamental indicator rose from 5.5% to 5.6%. However, because it decreased by 1%, traders only paid attention to the first indicator. After this report, bull speculators became more active, which is also reasonable. Recently, the market has received numerous rumors and statements from major institutions indicating that the Federal Reserve may not raise interest rates in May. If inflation declines rapidly, the U.S. regulator does not need to rush to implement a new PEPP tightening.
Consequently, following yesterday’s report, the probability of a rate hike in May fell below 50%, and the U.S. dollar resumed its decline. Now it would be very helpful to learn the status of European inflation, which has also slowed down significantly, according to the most recent report. Nonetheless, it is higher in the European Union than in the United States, and it is too soon for the ECB to consider not tightening the PEPP. I do not doubt that the ECB will raise rates again in May, giving the European currency new grounds to continue rising. Both central banks are nearing the end of the process of rate hikes, but the ECB began raising its rates later, so it may have to conclude later. Bullish speculators may continue to dominate the market for some time.
On the 4-hour chart, the pair has established itself above the side corridor, allowing traders to anticipate continued growth toward the corrective level of 61.8% (1.1273). Above the corrective level of 50.0% (1.0941), consolidation was also feasible, increasing the likelihood of further growth. Similarly, the “bullish” divergence of the CCI indicator benefited the euro. There are currently no new divergences brewing.
Report on Commitments of Traders (COT):
During the previous reporting week, 2498 long contracts and 4130 short contracts were opened by speculators. Overall, the sentiment of significant traders remains “bullish” and continues to improve. The total number of long contracts held by speculators is now 225 thousand, and the number of short contracts is 82 thousand. The European currency has been rising for over six months, but the number of long contracts among professional speculators has remained unchanged over the past few weeks. After a long “black period,” the euro’s situation remains favorable, so its prospects remain positive. At least until the ECB gradually increases the interest rate by 0.50%. However, the market sentiment may turn bearish in the near future, as the ECB cannot continue to raise the rate by a half-percentage point, and the rate may drop to 0.25% in May. There are sell indicators on both graphs.
News calendar for the United States and Europe:
Germany – consumer price index (CPI) (06:00 UTC).
E.U. – volume of industrial production (09:00 UTC).
U.S. – producer price index (PPI) (12:30 UTC).
U.S. – number of initial applications for unemployment benefits (12:30 UTC).
The economic events calendar for April 13 contains several intriguing entries but nothing of comparable significance to yesterday’s inflation report. Today, the impact of the information context on speculators’ sentiment will be minimal.
EUR/USD forecast and trading suggestions:
On the hourly chart, sales can be initiated when the pair rebounds from the 1.1000 level with a target of 1.0917. On the 4-hour chart, purchases were feasible when the price closed above 1.0941 with targets of 1.0000 and 1.1035. The first one has been developed.
The material has been provided by InstaForex Company – www.instaforex.com
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