U.S. CPI & E.U. Economic Forecasts Ahead!
The EUR/USD rose to its highest since February 25 on Tuesday amid the news that the European Commission expects to finish work soon on a COVID-19 certificate that could allow citizens to travel more efficiently this summer in the bloc. According to an E.U. executive, the pass would allow the vaccinated, recovered from COVID-19 or with negative test results to cross borders in a union where restrictions on movement have weighed heavily on the travel and tourism industry for more than a year.
The Commission president said that it was working closely to inform the United States, the World Health Organization, and others about its progress to allow the certificate to be used on a broader scale. However, the European Parliament has said that no one will be obliged to use the E.U. certificate, and it must not be considered a vaccine passport. Another reason behind the rising prices of EUR/USD pair was the positive hopes for the summer holiday season as the vaccination campaigns in the E.U. were gaining speed with 200 million jabs being delivered a day along with the declining infection rates and the reopening of cities and beaches in the E.U.
The German Europe Minister Michael Roth said that the E.U. certificate was necessary for countries depending on tourism. Still, it was important for all countries as it was a clear signal for freedom of movement and mobility in the European Union. This added strength to the single currency Euro and pushed EUR/USD pair higher on Tuesday.
On the data front, at 11:00 GMT, the German WPI for April reduced to 1.1% against the expected 1.8% and weighed on the single currency Euro that capped further upside in EUR/USD pair. At 13:00 GMT, the Italian Industrial Production for March also declined to -0.1% against the forecasted 0.5% and weighed on Euro, limiting the upside momentum in EUR/USD pair. At 14:00GMT, the ZEW Economic Sentiment from the whole bloc for May rose to 84.0 against the projected 68.0 and supported Euro that added further EUR/USD pair gains.
The German ZEW Economic Sentiment also surged to 84.4 against the projected 72.0 and supported Euro that pushed EUR/USD pair even higher. From the U.S. side, at 15:00 GMT, the NFIB Small Business Index came in line with the projections of 99.8. At 19:00 GMT, the JOLTS Job Openings rose to 8.12M against the estimated 7.50M and supported the U.S. dollar that limited the rising prices of EUR/USD on Tuesday. The U.S. Dollar Index (DXY) also remained under pressure on Tuesday and dropped below the $90 level that also supported the rising prices of the EUR/USD pair. Furthermore, the scientists in France have warned of a race between variants and vaccinations. He said that a fourth wave of the pandemic would be unmanageable due to medical staff's summer heat and exhaustion. This warning came in after France reported 20 new cases of the Indian variant in the country.
According to WHO, the Indian variant of coronavirus was a more contagious and global concern. It is considered responsible for the explosive second wave of coronavirus in India as WHO suspected that this virus might also have some resistance to antibodies. The rising fears that the Indian variant of coronavirus has entered the European Union could unleash the fourth wave of coronavirus. That added pressure on the single currency Euro and further capped gains in EUR/USD pair on Tuesday.
EURUSD Intraday Technical Levels
Pivot Point: 1.2145
EUR/USD - Technical Outlook
The EUR/USD is trading slightly bearish at 1.2126, having completed 23.6% Fibonacci retracement on the 4-hour timeframe. Recently, the single currency Euro has closed "Three Black Crows" on the 4-hour timeframe, which suggests odds of bearish trend continuation in the market. That being said, the EUR/USD's next support holds around 1.2104 level that's extended by 38.2% Fibonacci retracement level. Continuation of further selling trend and violation of 1.2104 level exposes the pair towards 1.2058 (61.8% Fibo level). A similar support level of 1.2058 extended by 20 & 50 periods of EMA level on the daily timeframe. On Wednesday, the trader's focus will stay on the U.S. Inflation figures as these figures can drive strong price action in the market. Economists expect CPI to drop from 0.6% to 0.2%, while the Core CPI data is expected to be neutral. Lastly, the E.U. economic forecasts from European Commission will also remain under the spotlight today. All the best!
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