EUR/USD, GBP/USD, DXY Price Forecast: Inflation Surges to 3.5%, PPI Data Looms

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Published: Apr 11, 2024, 07:51 GMT+00:00

Key Points:

U.S. CPI rises to 3.5% Y/Y, hinting at prolonged inflation and influencing Fed's rate path.
EUR/USD reacts to Italian Industrial Production data; ECB rate decisions under the spotlight.
GBP/USD's future hangs on MPC Member Greene's insights into UK's monetary policy adjustments.

Market Overview

Recent U.S. inflation data revealed a Consumer Price Index (CPI) increase of 0.4% month-on-month, pushing the annual rate to 3.5%, indicating sustained inflationary pressure. These figures could influence the Federal Reserve’s rate strategy, impacting the dollar and, consequently, EUR/USD and GBP/USD movements.

Events Ahead

EUR/USD: Watch for the Italian Industrial Production m/m data, expected at 0.6%, a significant shift from the previous -1.2%. The Eurogroup meetings and the European Central Bank’s (ECB) decisions, including the Main Refinancing Rate, currently at 4.50%, will also be focal points.
GBP/USD: Market participants await remarks from MPC Member Greene, seeking insights into the UK’s monetary policy direction.

On the U.S. front, pivotal data releases are on the horizon with the Core Producer Price Index (PPI) m/m forecasted at 0.2%, down from 0.3%, and the PPI m/m expected at 0.3%, reduced from 0.6%. Furthermore, Unemployment Claims are projected to slightly decrease to 216K from 221K.

US Dollar Index (DXY)

Dollar Index

The Dollar Index (DXY) hovers near $105.20, stabilizing after a 1% rise on Wednesday. The pivot point at $105.11 indicates a cautious market stance, with resistance levels at $105.58, $105.97, and $106.27 suggesting potential upward limits.

Support levels at $104.78, $104.45, and $103.94 offer downside buffers. The 50 EMA at $103.97 lends short-term support, while the distant 200 EMA at $108.83 reflects longer-term trends.

The outlook remains bullish above the pivot, but slipping below could lead to a significant sell-off, highlighting the index’s sensitivity to current market dynamics.

EUR/USD Technical Forecast

EUR/USD Price Chart - Source: Tradingview

EUR/USD Price Chart – Source: Tradal5+++++0+qzingview

The EUR/USD pair remains steady at 1.0744, hovering near the pivot point of 1.0749. Resistance levels are marked at 1.0790, 1.0830, and 1.0882, indicating potential upside barriers.

Support is found at 1.0726, followed by 1.0694 and 1.0655, which could limit downward movements. The 50-day EMA at 1.0808 and the 200-day EMA at 1.0824 suggest a slightly bearish outlook in the near term.

The market’s bias is bullish above 1.0726; however, a drop below this support could trigger a significant selling pressure, highlighting a delicate balance in the current trading environment for EUR/USD.

GBP/USD Technical Forecast

GBP/USD Price Chart – Source: Tradingview

The GBP/USD pair is exhibiting a slight uptrend, currently trading at 1.2556, up by 0.18%. With the pivot point at 1.2520, resistance levels are identified at 1.2591, 1.2630, and 1.2709. These levels serve as potential thresholds for price escalations.

Support levels are established at 1.2495, 1.2465, and 1.2419, providing downside barriers. The 50-day and 200-day EMAs, positioned at 1.2615 and 1.2640 respectively, hint at a bullish bias above the pivot point.

A sustained trade above 1.2520 could foster further gains, while a breach below this critical juncture may initiate a pronounced selling momentum in the market.

For a look at all of today’s economic events, check out our economic calendar.

About the Author

Arslan Aliauthor

Arslan is a finance MBA and also holds an MPhil degree in behavioral finance. An expert in financial analysis and investor psychology, Arslan uses his academic background to bring valuable insights about market sentiment and whether instruments are likely to be overbought or oversold.

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