EUR/USD Pulse Check 30 Apr 19


The EUR/USD is currently attempting to raise above the immediate resistance of 1.1225.

1.12 Awaits

Looking at the EUR/USD 60 minutes chart above, we note that the currency pair has been gaining towards the upside.

Last week we mentioned that 1.12 might provide a pivotal influence. This is when a breach on either side gets drawn back to the line like a rubber band. We can see it in action now as the currency pair crossed the 1.12 line and climbs. If bullish recovery continues, we may see the next immediate resistance at 1.1260, just outside of this chart.

The yellow lines are the possible support and resistance regions in the immediate vicinity. Do note that price action in shorter time frames are often sentimental in nature.

Euro Zone’s Good Week

The Spanish Flash GDP, German Prelim CPI and Euro Zone Prelim Flash GDP came in better than expected. It was forecasted to be 0.6%, 0.5% and 0.3% respectively. The results were 0.7%, 1% and 0.4% respectively.

Gross domestic product is a measure of the monetary market value of all the goods and services produced. It is an overall measure of economic activity and health. A positive development will add to the positive sentiment.

CPI or Consumer Price Index is important because the price of consumer goods is a significant component of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation. The increase of 1% compared to 0.5% is twice the expected result. Germany is the Euro Zone’s biggest economy and hence this release will likely be a significant boost for the euro currency.

USA Joins The Positive Club

Moments earlier, the CB Consumer Confidence came in better than expected at 129.2 instead of 126.2. Consumer surveys are influential as the sentiment of consumers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and hence consumers are confident. This likely leads to increased retail sales. A cautious sentiment on the other hand may see consumers spend less in view of a perceived looming economic crisis.

In view of this. we may see some tug o war price action between the two currencies as t he market decides which currency ‘s prospect is better. After all, price action in short time frames are usually sentimental.

Still to Come

There are a number of speculation that the upcoming FOMC statement may include suggestions that open the possibility of a rate cut. If indeed, we may see increased volatility as the market is barely over the fact that the previous plan for interest rate hike has stopped.

Many important economic events are still to come, including:

USA ADP Non-Farm Employment Change
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. ADP NFE Change is used by a number of analyst as a precursor of the US NFP.

USA ISM Manufacturing PMI
Surveys of purchasing managers are important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

USA FOMC Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

USA Federal Funds Rate
A high interest usually generates demand while a low interest may result in dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

USA FOMC Press Conference
Press conferences often go into unscripted territory during the Question and Answer segment and hence may spur unexpected developments and volatility.

EUR CPI Flash Estimate
EUR Core CPI Flash Estimate
CPI or Consumer Price Index is important because the price of consumer goods is a significant component of inflation. If inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Average Hourly Earnings
Employment cost is a leading indicator of inflation. If cost rises, the increase is reflected downstream in the price of production and products. If inflation is high, a central bank may increase interest rate to mitigate the situation.

USA Non-Farm Employment Change
USA Unemployment Rate
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy. The US NFP often produces significant price volatility due to the importance of it.

USA ISM Non-Manufacturing PMI
Surveys of purchasing managers are important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

USA Various Federal Reserve Officials Speeches
A number of Federal Reserve Officials are scheduled to speak towards the end of  the week.  As there may be press conferences which may go into unscripted territory during the Question and Answer segment, any unexpected developments may result in volatility.

There are many more events and hence it is important to follow an economic calendar. By doing so, you can reduce the possibility of an unexpected development affecting your trading plan. Members can log in to their dashboards for an economic calendar. The latest premium analysis and our popular Price Action Bias Signals are now available too.

Traders should always practice proper money management and seek to understand the underlying tones for the market.

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