- EUR / USD rose on Wednesday as a result of USD weakness and was back above 1.2100.
- Data from the US and the Eurozone largely went under the radar and the pair is trading broadly based on USD sentiment.
EUR / USD has seen a gradual bullish move for most of Thursday, with gains accelerating shortly before the opening of the US session amid an extension of the weak US dollar. The pair is now comfortably trading above the 1.2100 level again and at 1.2120, above the day’s lows around 1.2080 set just before the EU cash open. For now, the day’s earnings have been capped at the 1.2140 mark.
Right now, the pair is trading with gains on the day of around 0.1% or nearly 20 pips and is roughly in the middle of the trading range of the last two weeks; To the upside, price action has been restricted above 1.2150, while to the downside, the 1.2060 area has offered support.
On the economic agenda
Releases of level one data from both the euro zone and the US had minimal impact on price action on Thursday. For reference, starting with the US; The first estimate of fourth quarter GDP growth was released at 1:30 PM GMT and showed the US economic growth rate slowing to 4.0% annualized (meaning that if the US economy continued growing at the rate it did in the fourth quarter for a whole year, it would grow 4.0%). This was in line with expectations. As always, the first estimate could face big revisions in the coming weeks. Meanwhile, weekly jobless claims figures were released and were generally better than expected; Initial jobless claims reached 847,000 (versus forecasts of 875,000), while continuing jobless claims fell to 4,771M (versus expectations to remain stable at 5,054M).
Meanwhile, the main data for the eurozone on Thursday was the preliminary estimate of German consumer price inflation in January; the annual headline inflation rate jumped to 1.0% from -0.3% in December, more than the expected increase to 0.7%. Meanwhile, Germany’s core inflation metric, the HICP, surprised by rising to 1.4% year-on-year from 0.6% in December against expectations of a drop to 0.3%. The increase was mainly due to the reversal of a VAT tax cut in 2020.
ING suggests that “Thursday’s inflation number is just the beginning of a period of significantly higher headline inflation in Germany … the full impact of higher energy prices compared to last year will be shown in the next months. ” However, before people get too concerned about the incoming wave of inflation, banks note that “the economy will not reach its pre-crisis level before early 2022, unemployment and bad debt are sure to rise and further appreciation. of the euro will be quite deflationary, putting a brake on any inflationary pressure ”.
Technical levels
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