The Greenback sunk to a one-year low, while the Euro surged to a one-year high, leaving the EURUSD currency pair’s year-to-date pinnacle in the rearview.
U.S. PPI came in lower than expected, declining 0.5% against consensus, converging with the decline in consumer prices, which saw inflation decline by 0.3% against February’s reading. Traders boosted their wager on a Fed Rate Ease by the end of the year, with probabilities now sitting at the 92% mark.
Technical
On the H4 chart, the EURUSD currency pair has traded higher after bulls piled into the market at the 61.80% Golden Ratio. A breakout above the year-to-date high formed support at the 1.10307 level. Resistance was formed at the 23.6% Fibonacci Extension level at 1.10682, following a rejection of the level.
With bullish traders on the front foot, they could be looking to send the pair higher, with the 1.10682 level set out as a probable target. If bullish traders surpass this level, the next probable level of interest will be the 1.10950 level at the 38.2% Fibonacci Extension level.
Alternatively, if volumes support a reversal from the 1.10682 level, price action could be lowered, with bearish traders likely aiming for the 1.10307 level.
Summary
With the trading session’s highlight of Retail Sales looming, traders will look for cues on where the Federal Reserve’s interest rate direction could go. Weaker retail sales could benefit the Euro at the expense of the Greenback as jumbo-sized rate hikes could become a thing of the past. The 1.10307 level will define market sentiment as a breakout above it could lead to the pair’s move higher, while a reversal could play out if the level is respected.
Sources: U.S. Labor Department, TradingView
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