After the bullish start of the year, the rand has started to weaken since the last Thursday. Let’s point out the main factors affecting the ZAR and set the key levels for this week’s trading.
EUR/USD: outlook for April 3-7
During the past week, EUR/USD touched levels above 1.0900, but then plummeted to 1.0670. The single currency ran into some heavy resistance of the descending 200-day MA, so when reports came that the markets had overestimated the European Central Bank’s willingness to taper its monetary stimulus, it was all the bears needed to initiate a selloff. What happened is that Reuters published the information citing the unknown sources that the ECB is comfortable with the current inflation and is wary about lifting interest rate back from negative to zero. Inflation figures for March did come below expectations: headline CPI rose by 1.5% after gaining 2% in February. The core reading is still far from the ECB’s 2% target. As a result, the pressure for the ECB to tighten policy diminished. This may further deprive the euro of its recent strength.
We will surely get a better insight into at the ECB’s mindset on Thursday, when the central bank will release the accounts of its March meeting. Other semi-important pieces of data in the European economic calendar include the region’s PPI on Monday, retail sales on Tuesday, German factory orders on Thursday and its trade balance & industrial production on Friday. Still, these figures are not key for the euro area, so everything except the news from the ECB they will likely have limited impact on the market. By the way, don’t forget the political aspect as France is preparing to the first round of presidential election on April 23. For now, by centrist pro-euro Emmanuel Macron is leading in the opinion polls, but surprises are always possible.
We assume that in the short-term the euro may go lower by the sheer force of gravitation. EUR/USD found some support at 50-day MA (1.0670). Further levels to watch on the downside are 1.0625 (100-day MA) and 1.0580 (support line from January lows). A break below the latter will open the way down to the key psychological level of 1.0500, which was so good in preventing the euro’s further decline in late February/early March. Resistance is at 1.0717 and 1.0780.
If we look at the daily charts of the US dollar index and the USD/JPY pair, we will see a misleading trend.
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The last "Pennant" pattern has been broken, so bulls found resistance at 1.2915. Nevertheless, the market is likely going to move on, so we should...
USD/CHF remains weak across the board and stays strong with a bearish consolidation below the 200 SMA at H1 chart…
There's no any reversal pattern so far, so the market is likely going to test the nearest resistance area in the short term...