Summary:
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EURUSD rises after data from both sides of the Atlantic
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US CB consumer confidence: 129.2 vs 126.8 exp
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German CPI M/M: +1.0% vs 0.5% exp
The EURUSD has built on a rally which began yesterday morning as the most popular currency pair looks to recover from its lowest level in almost 2 years seen last week. The latest German inflation figures released earlier this afternoon have provided some good news for bulls, with the release coming in well above forecast. The preliminary CPI for April M/M was +1.0% vs +0.5% expected after a prior print of 0.4%. In Y/Y terms this equates to +2.0% vs +1.5% expected and 1.3% prior.
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German inflation picked up sharply this month and could well be seen to signal a pick-up in price pressures across the bloc. Source: XTB Macrobond
The headline CPI can deliver a misleading view of inflation and some see the HICP as a more true reflection of price pressures. The HICP reading however supported the rise in the CPI with a M/M rise of 1.0% and a Y/Y increase of 2.1% against consensus forecasts for 0.5% and 1.7% respectively.
A couple of hours later we got the main data point of the day from the US, with the Conference Board consumer confidence index rising to 129.2 from 124.2 last time out. The prior reading was subject to a small upward revision of 0.1 and the current reading was comfortably above the 126.8 expected. This is clearly a strong reading and supports the recent bounce back in the UoM equivalent with both consumer confidence metrics still not far from their highest levels of the decade.
The CB consumer confidence rose more than expected for April and along with the Uni Mich reading continue to point to a buoyant mood amongst US consumers. Source: XTB Macrobond
The technical situation on the EURUSD is an interesting one with the pair reclaiming the 1.1180 level that had previously provided support. While the German inflation figures could be seen as supportive of the pair, the US consumer number were equally supportive of the greenback and the gains don’t seem commensurate with the relative data points. As it is 30th April this could be a case of month end flows where there’s some pretty broad based USD weakness as traders appear to be selling back the buck after a strong recent run higher.
The EURUSD has moved back above the 1.1180 region and is now retesting the 21 EMA from below. The 8/21 EMAs remain in a bearish orientation but price has bounced from the lower reaches of a falling trend channel which has contained the market so far in 2019. Source: xStation
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