Since April 16, the EURUSD has been on an upward trend due to persistent inflation, geopolitical turbulence, and high interest rates. The foreign exchange market's most actively traded currency pair has bounced off the trough price of 1.06015 and is now above the 50-period Exponential Moving Average, indicating the potential of higher exchange rates. However, the upcoming inflation data, the Producer Price Index, for the US economy, set to be released this Tuesday, may impact the future direction of the EURUSD currency pair. Traders will closely monitor the EURUSD this week as significant economic data that could affect currency valuations is due to be released.
Overview
Since April 16, the EURUSD has been on an upward trend due to persistent inflation, geopolitical turbulence, and high interest rates. The foreign exchange market's most actively traded currency pair has bounced off the trough price of 1.06015 and is now above the 50-period Exponential Moving Average, indicating higher exchange rates. However, the upcoming inflation data, the Producer Price Index, for the US economy, set to be released this Tuesday, may impact the future direction of the EURUSD currency pair. Traders will closely monitor the EURUSD this week as significant economic data that could affect currency valuations is due to be released.
High Impact Economic Events
Monday 03:00 am (GMT+0): Inflation Expectations q/q (NZD)
Tuesday 06:00 am (GMT+0): Claimant Count Change (GBP)
Tuesday 12:30 pm (GMT+0): Core PPI m/m (USD)
Tuesday 12:30 pm (GMT+0): PPI m/m (USD)
Wednesday 01:30 am (GMT+0): Wage Price Index q/q (AUD)
Wednesday 12:30 pm (GMT+0): Core CPI m/m (USD)
Wednesday 12:30 pm (GMT+0): Core Retail Sales m/m (USD)
Wednesday 12:30 pm (GMT+0): CPI m/m (USD)
Wednesday 12:30 pm (GMT+0): CPI y/y (USD)
Wednesday 12:30 pm (GMT+0): Empire State Manufacturing Index (USD)
Wednesday 12:30 pm (GMT+0): Retail Sales m/m (USD)
Thursday 01:30 am (GMT+0): Employment Change (AUD)
Thursday 01:30 am (GMT+0): Unemployment Rate (AUD)
Technical Analysis
The EURUSD currency pair has recently, on April 16, rebounded from the trough price of 1.06015 and has adopted an upward trajectory above the 50-period Exponential Moving Average. The upward trajectory indicates the potential for higher exchange rates. Specifically, the trough at 1.06493, which was marked on May 1, failed to fall lower than the previous trough of 1.06015. Consequently, prices exceeded the peak price of 1.07529, resulting in a failure swing. Both the 50-period Exponential Moving Average and the Momentum oscillator agree with the bullish outlook. However, the negative divergence between the price and the Momentum oscillator raises an alert for a potential correction.
Potential Upside Targets
If the bulls manage to maintain control of the EURUSD pair, traders may consider the following three potential upside targets:
1.08359: The initial price target stands at 108359, aligning with the 61.8 percent Fibonacci Retracement drawn from the peak price of 1.09811 down to the trough of 1.06015.
1.09205: The second price objective is seen at 1.09205, corresponding to the 261.8 percent Fibonacci Extension drawn from the peak of 1.07268 down to the trough of 1.06493 marked on May 1.
1.09811: An additional potential price objective could be identified at 1.09811, representing the peak marked on March 8.
Potential Downside Targets
Should the bears take control of the EURUSD, traders may consider the following three potential downside targets:
1.07268: The initial target stands at 1.07268, aligning with the peak price marked on April 26.
1.06493: The second potential support is found at 1.06493, corresponding to the trough price marked on May 1.
1.06015: An additional potential support could be identified at 1.06015, representing the trough marked on April 16.
Fundamentals
The Producer Price Index (PPI) measures the average change over time in prices received by producers for domestically produced goods, services, and construction. More than 10,000 PPIs for individual and group products are released each month. PPIs are available for the products of virtually every industry in the mining and manufacturing sectors and for products of industries in the services and construction sectors of the US economy.
It's a leading indicator of consumer inflation. When producers increase prices for goods and services, it can be an early sign of inflation for consumers. This is because higher costs are often passed on to the consumer.
Conclusion
To sum up, the EUR/USD exchange rate is currently trending upwards due to a technical reversal known as a failure swing. This caused the exchange rate to move above the 50-period Exponential Moving Average. The reasons behind this could be geopolitical unrest, inflation in the US economy, and uncertainty around interest rate cuts by the Fed. The current positive momentum suggests that exchange rates may increase further, which highlights the importance of managing market risks carefully. It's crucial to stay updated with economic events and geopolitical changes to make informed trading decisions in the financial markets.