Euro Consolidates Around 1.16 over Positive Inflation Data

The EURUSD pair saw increased activity across Thursday’s trading session as the pair was influenced by back to back news from both European and US markets. The pair saw positive support in favor of common currency as fears over Italian crisis ebbed down due to Italy’s League and 5-Star having finally reached an agreement to form a coalition government after naming economics professor Giovanni Tria as the candidate to be presented for the ministry of finance. This pushed the pair to move above 1.17 price handle during late European session. However news from the United States took the wind out of euro’s sails as U.S. Commerce Secretary Wilbur Ross stated that they were going to start imposing 25% steel and 10% aluminum tariffs on the European Union, Canada, and Mexico starting midnight tonight. However positive results on European macro calendar for second consecutive day helped the common currency consolidate above 1.16 price handle.

EURUSD Consolidates

On release end the headline CPI jumped from a 1.2% to 1.9% and Core CPI jumped from 1.0% to 1.1% while Unemployment rate for April was a bit worse than expected as the current rate is at 8.5% compared to 8.4% the previous month in European market. In US market the two major data expected were pending home sales and Crude Oil inventory of which the former saw dovish outcome while later saw better than expected data. This positive inflation data from European market materially bolsters the probability that the central bank will announce its plans to normalize policy at its next meeting.

With US decision to impose tariff, global trade conflict which had partially receded over the past few weeks, were rekindled as Washington’s allies took steps to retaliate against the U.S. measures and this has started to weigh down the US Greenback. As the pair approaches last trading session for the week, investors focus moves to Manufacturing PMI data in Euro zone and German markets while focusing on Non-Farm Payroll, Unemployment Rate and ISM Manufacturing PMI data in US markets. Expected support and resistance for the pair are at 1.1640 / 1.1603 / 1.1561 and 1.1690 / 1.1719 / 1.1730 respectively.