The EUR/USD pair initially tried to rally on Tuesday, but disappointing ZEW data in the euro zone and upbeat housing and industrial production data in the U.S. supported the dollar and pushed the pair back to the middle of its current range. Support is set at 1.23, resistance at 1.24.
The common European currency hit a three-week high, but a single release was enough to push the euro back down again. ZEW institute data release strongly disappointed the euro bulls. Investor sentiment reading in Germany was the weakest since November 2012. Current situation reading came at 87.9, but it’s the expectations index that notched the biggest drop, coming at -8.2 while -1 was expected. This means a drop by 13.3 points when compared to last months reading of 5.1.
The dollar enjoyed some support. Apart from the euro’s weakening, the U.S. currency was supported by improved investor sentiment and a release of upbeat economic data. It seems that the conflict with Russia regarding Syria won’t escalate, we also haven’t seen any negative headlines about the trade tensions between the U.S. and China. The greenback received support thanks to a batch of good readings. Housing starts in March came at 1.319 mln, while only 1.267 was expected. Building permits numbers also surprised and came at 2.5% while it was expected to remain unchanged. Industrial production numbers also came quite strong at 0.5% while 0.3% was the market consensus.
Pic.1. EUR/USD chart.
The EUR/USD pair returned to the middle of its current range, but it’s the dollar that seems to be favoured at this time. Consumer price index release will be the main event of the day on the data side. If the reading disappoints, this may pave the way for the pair towards the support at 1.23.