EUR/USD is in positive territory on Tuesday. Currently, EUR/USD is trading at 1.1935, up 0.20% on the day.
German ZEW Economic Sentiment slips
The closely-watched German ZEW Economic Sentiment index disappointed in April, falling to 70.6. This was down sharply from 76.6, and well off the consensus of 79.9. This was the first decrease since November 2020, but the index still remains at a high level, as financial experts still have relatively strong expectations for the German economy in the next six months. The drop is being attributed to concerns that consumer spending will decline due to tighter lockdown restrictions.
It was a similar story for the all-European release, which fell to 66.3 points. This shows that the concerns over the German economy, the largest in the eurozone, apply to the entire bloc. The sluggish vaccine rollout has done nothing to raise confidence levels, although the rollout is expected to gather steam as more vaccines are made available. The EU is projected modest growth of 1.7% in Q1 for the eurozone, and growth rates are likely to accelerate later in the year, assuming that the battle against Covid progresses well.
US CPI accelerates slightly
US consumer inflation edged higher in March, but not enough to have a significant impact on the currency markets. Headline CPI came in at 0.6%, up from 0.4%. Core CPI also improved, rising from 0.1% to 0.3%. These readings edged above the forecasts, but it’s unlikely that the numbers will make the Fed rethink its ultra-accommodative stance. Stronger inflation is another sign that the US recovery continues to gain traction, but the Fed will likely reiterate that the present level of QE is needed to buttress the US economy. Still, inflation, which has been under the radar for years but is gaining strength, is likely to be closely monitored by the markets and the Federal Reserve.
- There is resistance at 1.1973. Above, there is resistance at 1.2044
- On the downside, there is support at 1.1784, followed by a support line at 1.1666
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