EUR/USD: Euro-zone’s annual inflation growth slowed to a 6-month low in June


EURUSD Movement

For the 24 hours to 23:00 GMT, the EUR declined 0.17% against the USD and closed at 1.1423 on Friday, after the Euro-zone’s flash consumer price index (CPI) advanced 1.3% on an annual basis in June, rising at its weakest pace since the start of this year, thus suggesting that inflation in the common currency region is not yet on a stable path despite a variety of stimulus measures used by the European Central Bank. In the preceding month, the CPI had climbed 1.4%, while markets had envisaged for a gain of 1.2%.

Separately, Germany’s retail sales rebounded more-than-expected by 0.5% on a monthly basis in May, compared to market consensus for an advance of 0.3%. In the prior month, retail sales had recorded a drop of 0.2%. Moreover, the nation’s seasonally adjusted unemployment rate remained steady at 5.7% in June, at par with market expectations. On the other hand, the number of people unemployed in Germany unexpectedly rose by 7.0K in June, advancing for the first time in more than a year and defying market expectations for a drop of 10.0K. In the prior month, the number of people unemployed had dropped by a revised 7.0K.

In the US, data showed that personal spending climbed 0.1% in May, meeting market expectations. Personal spending had advanced 0.4% in the previous month. Also, the nation’s personal income rose 0.4% on a monthly basis in May, surpassing market expectations for a gain of 0.3%. In the prior month, personal income had risen by a revised 0.3%.

Other economic data revealed that the US final Michigan consumer sentiment index dropped to a level of 95.1 in June, hitting its lowest level since November 2016 and compared to a reading of 97.1 in the previous month. However, the index was revised higher from a level of 94.5 registered in the preliminary print. Further, the nation’s Chicago Fed purchasing managers index unexpectedly advanced to a level of 65.7 in June, notching its highest in more than 3 years and following a level of 59.4 in the previous month.

In the Asian session, at GMT0300, the pair is trading at 1.1416, with the EUR trading 0.06% lower against the USD from Friday’s close.

The pair is expected to find support at 1.1391, and a fall through could take it to the next support level of 1.1365. The pair is expected to find its first resistance at 1.1443, and a rise through could take it to the next resistance level of 1.1469.

Going ahead, investors will keep a close watch on the final Markit manufacturing PMI for June across the Euro-zone along with the region’s unemployment rate data for May, slated to release in a few hours. Additionally, the US ISM manufacturing PMI and the final Markit manufacturing PMI, both for June as well as construction spending data for May, will garner significant amount of market attention.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

This entry was posted in EUR/USD. Bookmark the permalink.

Comments are closed.