EURUSD forecast: range trading to persist ahead of US PPI data

The EURUSD pair was little changed ahead of the Producer Price Index (PPI) data from the United States. The PPI, which is an important measure of inflation, will come a day after the country released weak consumer price data.

US PPI data eyed

The biggest data in the economic calendar today will be the PPI index. This number measures the change in price of goods that are sold by manufacturers. It is a closely watched measure of inflation in the United States.

Analysts polled by Bloomberg expect the PPI to have declined by 0.5 per cent between March and April. This will be the worst decline since 2015. They expect the PPI to drop from the previous 0.7 to minus 0.2 per cent.

Meanwhile, analysts expect the core PPI to have remained unchanged in April and rise by just 0.9% on an annualised basis.

The weak inflation data comes at a time when the US is facing its worst financial crisis in modern times. Retail sales, housing, jobless claims, manufacturing, and services activity has dropped to historic lows.

At the same time, congress has been throwing money at the problem. It has already spent more than $2.6 trillion in providing stimulus to the economy. And, congressional democrats have announced another $3 trillion spending plan.

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EURUSD technical outlook

On the two-hour chart, the EURUSD pair rose yesterday after the weak inflation data from the United States. It moved to an intraday high of 1.0886 before it formed a bearish engulfing pattern. The price is slightly above the 100-day and 50-day EMA and between the 38.2% and 50% Fibonacci retracement level. It has also formed a small bullish pennant pattern, which implies that it may attempt to retest the yesterday’s high of 1.0886.

On the flip side, a move below the support level at 1.0838 will open the possibility of the pair moving lower. This price is at the intersection of the 100-day EMA and the 38.2% retracement level.

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