After Tuesday’s sharp slide against European currencies that send the US Dollar Index below 100.00, the greenback trimmed some of its recent losses. The corrective mode continues but it appears to be losing strength headed into the Asian session. Equity prices in Wall Street dropped for the second day in a row. Crude oil fell sharply while the bond market also corrected with yields rising moderately.
In the Euro area, inflation data came in as expected. Annual inflation was 1.5% in March while the trade balance showed a larger-than-expected surplus of €19.2B (adjusted). The relevant report tomorrow will be the German PPI index. The key driver for the euro during the next days could be the French Presidential election, to be held on Sunday. In the US, during the American session, the Beige Book was released. According to the document economic activity expanded at a modest-to-moderate pace until the end of March (nothing new). Tomorrow jobless claims data will be released and Treasury Secretary Mnuchin will deliver a speech. He has been talking about the US dollar lately.
The EUR/USD pair made a modest pullback on Wednesday. The short-term bias continues to point to the upside. The euro failed to break the 1.0740 barrier, before correcting lower: a break higher would reinforce the bullish bias. Technical indicators in the 4-hour chart are not giving clear signals, suggesting that the consolidation could continue. Only a break below 1.0700 would add room to a more significant decline that should stop before 1.0670. Only below 1.0670, the euro is likely to lose momentum significantly. The same chart also shows that the 20-SMA is crossing over the 100-SMA (bullish signal). Above the 1.0740 zone, the next resistances are seen at 1.0780 and 1.0805.
Support levels:1.0690 1.0675 1.0630
Resistance levels: 1.0740 1.0780 1.0805