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EUR/USD – Wall Street gains support the dollar – Analysis for April 5th 2018

The EUR/USD pair stayed in its current range after the release of a batch of data both in Europe and the U.S. The greenback managed to notch some gains thanks to further rebound of the biggest Wall Street indices. Further support was brought by the news about negotiations between the U.S. and China. Support is set at 1.225, resistance at 1.235.

Commentary:

The euro was unable to gain after the release of consumer price index data. Headline inflation came as expected at 1.4%, core inflation stayed at the same level as in the previous month and gave a reading of 1.0% against the expected 1.1%. The unemployment rate reading also came as expected at 8.5%. The currency didn’t get any support from PMI numbers released this morning, which came slightly below market expectations.

Some mixed data were seen also in the United States. ADP employment data positively surprised, coming at 241k while only 210k was expected. The ISM non-manufacturing/services numbers came below the expectations, coming at 58.8 against 59.0 consensus, 0.7pts lower than the previous reading. Factory orders also seen a drop by 0.1% against the last reading, coming at 1.2% while 1.7% was expected. Durable goods orders reading came at 3.0%, slightly weaker than the previous month.

Although the data was mixed, the greenback managed to see some gains thanks to a rebound of the stock market. The DOW ended the session by 230.94pts higher, S&P500 gained 1.2%, Nasdaq rose by 1.5%. The rebound was made possible by some easing of the U.S. – China tensions. Donald Trump’s economic advisor Larry Kudlow said the the administration is in „negotiation” with China, and not engaged in a trade war.

Today’s releases:

  • 11:00 Euro zone – Retail sales y/y
  • 14:30 USA – Jobless claims
  • 14:30 USA – Trade balance

Analysis:

Pic.1. EUR/USD chart.

The markets are currently enjoying less tensions, supporting the dollar and the EUR/USD pair is seen just above the current support at 1.225 at the time of writing. The euro may possibly rebound if the retail sales data come above the expectations, but it’s the greenback that seems to be in better shape at this moment.

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