EUR/USD Return to $1.10 Euro Area Data and ECB Dependent

It is a busy day ahead for the EUR/USD. German wholesale inflation and euro area trade data will draw interest this morning. While the trade data influence, the German wholesale inflation figures will likely have more impact. Eurozone consumer confidence will also move the dial later in the session.

On Wednesday, euro area core inflation spooked investors despite the annual inflation rate for the euro area softening from 8.5% to 6.9% in March. A further decline in the German producer price index would ease pressure on the ECB. Economists forecast Germany’s producer price index to fall by 0.5% in March.

With inflation being the focal point, the ECB’s monetary policy meeting accounts will also garner interest this afternoon. Considerations for the May interest rate decision and policy intentions beyond May will influence.

However, investors should monitor ECB commentary today. ECB President Christine Lagarde and ECB Executive Board member Isabel Schnabel are on the calendar to deliver speeches today.

Comments relating to the euro area CPI report and ECB monetary policy will move the dial.

EUR/USD Price Action

This morning, the EUR/USD was up 0.06% to $1.09601. A mixed start to the day saw the EUR/USD fall to an early low of $1.09467 before rising to a high of $1.09618.

Technical Indicators

Resistance & Support Levels

The EUR/USD needs to avoid the $1.0952 pivot to target the First Major Resistance Level (R1) at $1.0986. A move through the Wednesday high of $1.0984 would signal a bullish session. However, the EUR/USD needs positive euro area economic indicators and hawkish ECB chatter to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.1019. The Third Major Resistance Level (R3) sits at $1.1085.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0919 into play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.09 and the Second Major Support Level (S2) at $1.0885. The Third Major Support Level (S3) sits at $1.0818.

Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.09537). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above the 50-day EMA ($1.09537) would support a breakout from R1 ($1.0986) to give the bulls a run at R2 ($1.1019). However, a fall through the 50-day EMA ($1.09537) would bring S1 ($1.0919) and the 100-day EMA ($1.09144) into view. A fall through the 50-day EMA would send a bearish signal.

The US Session

Looking ahead to the US session, it is a busier day on the US economic calendar. Philly Fed Manufacturing Index figures for April and the all-important US jobless claims numbers will be in focus.

After a quiet first half of the week, we expect EUR/USD sensitivity to the stats. Inflation and labor market components of the Index will draw interest alongside the jobless claim figures. Deteriorating labor market conditions could test the theory of a post-May Fed interest rate hike.

However, FOMC member commentary will also influence. FOMC members Waller and Bowman will deliver speeches overnight.