We're beginning to see a Tale Of Two Economies emerge, as US data this week shows the path of disinflation continues, albeit slowly, giving investors hope that the Fed's interest rate increases are making an impact. Meanwhile across the pond, all quotes from the ECB are warning that the fight against inflation rages on and further rate hikes will be coming.
However, one major factor hanging over the Dollar is the news that there is "significant risk", according to the CBO, that the US won't be able to pay all of it's obligations as soon as the beginning of June, leading to the possibility of a default unless Congress votes to raise or suspend the Debt Ceiling.
From a technical perspective we see EURUSD failed a number of attempts to break through at the highs and has now begun to create lower highs and lows with it's violent moves down in recent days. Key trendlines and support levels have been broken and all signs point to the countertrend move having begun. While we appear overextended on lower timeframes, it may be prudent to wait patiently for a new lower high for a viable short entry.
It seems likely that we're witnessing a breakout to the upside on the DXY combined with profit taking and shift in sentiment for the Euro due to continued inflationary pressure in contrast to US inflation.
United States (US):
US CPI YoY 4.9% (Forecast 5%): Consumer prices rose 4.9% on an annual basis, below forecast.
US Core PPI YoY Actual 3.2% (Forecast 3.3%, Previous 3.4%): The US core Producer Price Index (PPI) rose by 3.2% year-on-year, slightly below the forecasted 3.3%.
US PPI MoM Actual 0.2% (Forecast 0.3%, Previous -0.5%): The US Producer Price Index (PPI) increased by 0.2% on a monthly basis, slightly below the forecasted 0.3%.
US Initial Jobless Claims Actual 264k (Forecast 245k, Previous 242k): The number of Americans filing for initial unemployment benefits rose to 264,000, exceeding the forecasted 245,000. This increase suggests ongoing challenges in the US job market.
The “single biggest threat” to the economy now is the US hurtling towards a default on its obligations, said Karine Jean-Pierre, press secretary.
European Central Bank (ECB):
ECB: Consumers see 5% inflation over the next 12 months vs 4.6% in February: The European Central Bank (ECB) reports that consumers in the Eurozone expect inflation to reach 5% over the next 12 months. This represents an increase from the previous estimate of 4.6% in February, reflecting growing concerns about rising prices.
ECB's Nagel says the "latest interest rate hike won't be the last".
ECB's Lagarde spoke on Thursday, saying "the fight against inflation isn't over".
However, one major factor hanging over the Dollar is the news that there is "significant risk", according to the CBO, that the US won't be able to pay all of it's obligations as soon as the beginning of June, leading to the possibility of a default unless Congress votes to raise or suspend the Debt Ceiling.
From a technical perspective we see EURUSD failed a number of attempts to break through at the highs and has now begun to create lower highs and lows with it's violent moves down in recent days. Key trendlines and support levels have been broken and all signs point to the countertrend move having begun. While we appear overextended on lower timeframes, it may be prudent to wait patiently for a new lower high for a viable short entry.
It seems likely that we're witnessing a breakout to the upside on the DXY combined with profit taking and shift in sentiment for the Euro due to continued inflationary pressure in contrast to US inflation.
United States (US):
US CPI YoY 4.9% (Forecast 5%): Consumer prices rose 4.9% on an annual basis, below forecast.
US Core PPI YoY Actual 3.2% (Forecast 3.3%, Previous 3.4%): The US core Producer Price Index (PPI) rose by 3.2% year-on-year, slightly below the forecasted 3.3%.
US PPI MoM Actual 0.2% (Forecast 0.3%, Previous -0.5%): The US Producer Price Index (PPI) increased by 0.2% on a monthly basis, slightly below the forecasted 0.3%.
US Initial Jobless Claims Actual 264k (Forecast 245k, Previous 242k): The number of Americans filing for initial unemployment benefits rose to 264,000, exceeding the forecasted 245,000. This increase suggests ongoing challenges in the US job market.
The “single biggest threat” to the economy now is the US hurtling towards a default on its obligations, said Karine Jean-Pierre, press secretary.
European Central Bank (ECB):
ECB: Consumers see 5% inflation over the next 12 months vs 4.6% in February: The European Central Bank (ECB) reports that consumers in the Eurozone expect inflation to reach 5% over the next 12 months. This represents an increase from the previous estimate of 4.6% in February, reflecting growing concerns about rising prices.
ECB's Nagel says the "latest interest rate hike won't be the last".
ECB's Lagarde spoke on Thursday, saying "the fight against inflation isn't over".
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