EURUSD on Rebound over Dovish US Macro Data

EURUSD pair has taken to uptrend movement since late North American session on Wednesday as US macro data failed to meet expectations. The pair has been trading well inside 1.16 price handle for majority of Asian market hours on Thursday’s trading session. The pair is currently trading at 1.16628 with 1.27% increase in value when compared to yesterdays lowest at 1.15170. German Retail Sales leaped by 2.3%, far above expectations. Inflation in the same country also rose more than predicted: 2.2% YoY on both European and German measures. Inflation is also robust in Spain that saw 2%, also beating early forecasts. After a long period of doom and gloom, the spring recovery seems real. Maybe the harsh winter weather takes all the blame.

EURUSD Rebounds

The ADP NFP came out at 178,000 against 190,000 expected for May. In addition, the figure for April was significantly revised to the downside: 163,000 instead of 204,000 originally reported. The GDP report for Q1 also came out below expectations: 2.2% annualized growth according to the second release instead of 2.3% initially seen. With both major releases that investors were on lookout for ending up bearish, the pair has gained significant momentum in Euro’s favor. The pair has gained over 150 points from ten month low seen on Tuesday. This uptrend movement of the pair is viewed by many as a reprieve as Italian leaders moved to mitigate political turbulence and avoid a potentially disruptive early election.

Apart from developments in Italy, investors are also looking to the upcoming euro zone consumer price data scheduled to release at 0900 GMT, which is expected to show inflation has accelerated to 1.6% in May. However the market also saw news that United States will announce plans to impose tariffs on steel and aluminum imported from the European Union and investors are waiting to see how things turn out before placing huge bets. If the CPI data in Euro Zone scheduled to release today turns out to be positive, then we can expect pair to consolidate above 1.16 price handle and there is high likely hood of pair reaching at least as high as 1.1730 during North American session. Expected support and resistance for the pair are at 1.1640 / 1.1603 / 1.1561 and 1.1690 / 1.1719 / 1.1730 respectively.