Upcoming Cold winter and Burning Energy Prices, What will Europe do?
The EU plans to intervene in markets directly to curb rising energy costs, threatening to push the Euro area's economy into a deep recession.
EUR/USD: outlook for April 3-7
2019-11-11 • Updated
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.
Similar
The Fed to Decide the Oil Market’s Future
The oil prices rally and world central banks’ dovish monetary policy caused by the Covid-19 pandemic were the main reasons for current inflation growth…
Pound Sterling’s Foggy Future
Weaker recoveries were seen in both the UK manufacturing and service sectors, with the latter recording the greatest loss of momentum since July.
Latest news
The Battle for Oil. OPEC Strikes Back
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold is Rising Despite Inflation Returns
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Can the Chinese Economy Recover?
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
