For the 24 hours to 23:00 GMT, the EUR rose 0.28% against the USD and closed at 1.1174, after the US Federal Reserve (Fed) cut interest rates in an effort to contain the impact of the coronavirus outbreak.
On the data front, Euro-zone’s consumer price inflation slowed to 1.2% on an annual basis in February, on coronavirus concerns and compared to a level of 1.4% in the previous month. Additionally, the producer price index (PPI) fell 0.5% on an annual basis in January, in line with market forecast and compared to a revised fall of 0.6% in the previous month. Meanwhile, the unemployment rate remained unchanged at 7.4% in January, registering its lowest rate since May 2008 and at par with market consensus.
In the US, In the US, the IBD/TIPP economic optimism index dropped more-than-expected to 53.9 in March, compared to a reading of 59.8 in the earlier month.
The US Fed, in a surprise move, slashed its benchmark interest rate by 50bps to 1.25%, its biggest single cut in more than a decade, in response to the growing concerns over the coronavirus outbreak. However, Chairman, Jerome Powell reiterated that the US economy remained “strong” but cautioned that the coronavirus posed “evolving risks” to economic activity. Further, he stated that the central bank is closely monitoring developments and would “act as appropriate” to support the economy.
In the Asian session, at GMT0400, the pair is trading at 1.1162, with the EUR trading 0.11% lower against the USD from yesterday’s close.
The pair is expected to find support at 1.1101, and a fall through could take it to the next support level of 1.1039. The pair is expected to find its first resistance at 1.1218, and a rise through could take it to the next resistance level of 1.1273.
Looking ahead, traders would keep a close watch on Euro-zone and Germany’s retail sales data for January, along with the Markit services PMIs, slated to release across the euro area in a few hours. Moreover, the US Markit services PMI and the ISM non-manufacturing PMI, both for February as well as the MBA mortgage applications and the Fed’s Beige Book report, all scheduled to release later in the day, will keep investors on their toes.
The currency pair is showing convergence with its 20 Hr and trading above its 50 Hr moving average.
