EUR/USD jumps to fresh one-year high above 1.1050 after US data


EUR/USD has been going up, and on Thursday it went above 1.1050, which was its highest level since March 2022. After US data showed that the annual PPI dropped from 4.9% in February to 2.7% in March, there was a lot of pressure to sell the US Dollar.

Technical Overview

The EUR/USD pair is trading close to its recent high of 1.1052, and the daily chart shows that the trend is likely to continue in a positive direction. Technical indicators keep going up, but the Momentum indicator is still below its yearly high and the Relative Strength Index (RSI) is getting close to overbought levels. At the same time, the pair keeps rising above bullish moving averages. The 20 Simple Moving Average (SMA) at 1.0860 is the one that is closest.

The pair is overbought in the short term, but there are no signs that the price will stop going up. On the 4-hour chart, technical indicators keep going up even though they are already at “overbought” levels, and the pair has gone even further past the bullish moving averages. There are some important weekly highs for the pair from 2022 in the area of 1.1050. This means that once above it, more gains are likely.

Support levels: 1.0980 1.0930 1.0890

Resistance levels: 1.1060 1.1100 1.1145

Fundamental Overview

The EUR/USD pair is back at 1.1000 and is trading at its highest level in a year in the 1.1040 range. The US Dollar continued to lose value because of inflation and was in the red for the first half of the day. This was because the US Consumer Price Index (CPI) rose only 0.1% from February to March and by 5% on an annualised basis, which was less than what the market had expected.

The news proved that the Federal Reserve’s recent “dovish” stance was right (Fed). The Federal Open Market Committee (FOMC) Minutes, which were released on Wednesday, showed that Fed officials talked about pausing the tightening cycle because of the US banking crisis in mid-March.

The collapse of two banks in March and the chaos that followed led some Federal Reserve officials to think about stopping the central bank’s tightening cycle. Fed staff also predicted that a mild recession would start later this year. The minutes say that policymakers “generally agreed that recent developments in the banking sector had made their already high level of uncertainty about economic activity, the labour market, and inflation even higher.”

The Euro, on the other hand, was helped by data from Europe. As expected, Germany confirmed that the Harmonized Index of Consumer Prices (HICP) was 7.8% YoY in March. Also, Industrial Production in the Eurozone went up 1.5% MoM and 2% YoY in February, which was better than what the market expected.

Before Wall Street opened, the US reported that Initial Jobless Claims for the week ending April 7 went up by 239K, which was worse than what was expected (which was a rise of 232K). Also, the Producer Price Index (PPI) for March went down by 0.5% MoM, which was better than expected, and it went up by 2.7% annually, which was less than the 4.6% increase seen in February. The news is good for the Greenback but bad for the Federal Reserve.

Source: Team CurrencyVeda