On Thursday, March 14, the US Producer Price Index data release caused a major surge of the US Dollar. The event resulted in the rate declining below 1.0900.
US PPI causes Dollar surge
Despite the US Consumer Price Index not impacting the markets on Tuesday, there is still inflation at the producer level. Namely, the publication of the US Producer Price Index has revealed that inflation in the US is persistent.The new data indicates that the US Federal Reserve still has to combat inflation by tightening monetary policy. The Fed cannot cut interest rate, if prices continue to rise. Due to this reason the US Dollar index surged. The news caused a surge of more than 35 points that easily passed above the 103.00 mark.
The US Producer Price Index was forecast to show an increase of 0.3%. Actual price increase was 0.6%. Meanwhile, the Core PPI was expected to come in at 0.2%, but turned out to be a 0.3% price hike. Previously, the United States Consumer Price Index hit the market forecast by showing a monthly price increase of 0.4%. However, the Core PCI was above the forecast of 0.3% by revealing core price growth of 0.4%.
Economic Calendar Analysis
Next week, all of the financial markets will be watching the US Federal Reserve Federal Funds Rate publication on Wednesday at 20:00 GMT. Note the time difference in the release, compared to the usual. The US has already switched to summer daylights savings time.
On Thursday, the Euro could move due to the publication of the European Flash Manufacturing and Services sector Purchasing Managers Index results. The publication of these survey results is scheduled from 08:15 up to 09:00 GMT.
Also on Thursday, the US Services and Manufacturing sector Purchasing Managers Indices might impact the financial markets. However, recent releases of the data had minor impact.
EUR/USD hourly chart analysis
The ongoing decline of the Euro against the US Dollar could look for support in the 1.0880 and 1.0860 levels. These levels have acted as support and resistance. It was previously assumed that they make up a support and resistance range. However, a closer look reveals that both of them are acting on their own. Further below, note the 1.0850 level and the weekly S1 simple pivot point at 1.0853.On the other hand, a recovery of the European currency or a decline of the Dollar would result in the pair facing a strong range of resistance at 1.0900/1.0920. The range is strengthened by the 200-hour simple moving average and the weekly simple pivot point at 1.0917. Above these levels, the 50 and 100-hour simple moving average could impact the rate near 1.0930, before the 1.0960 and 1.0980 levels are tested again.
Hourly Chart
EUR/USD daily chart's review
On the daily candle chart, the EUR/USD is above the 50 and 100- day simple moving average. A move above these technical indicators signals a surge to first the 1.1000 mark and afterwards the marked zones higher above.During the fundamental decline, the rate appears to have found support in the 100-day simple moving average near 1.0885.
Daily chart
Read More: Technical Analysis
Traders are short
After the PPI publication, traders were 66% short, as that amount of open position volume was in short positions.
Meanwhile, pending orders in the 100-pip range around the pair were 64% to buy.
Traders appeared to be short with close by stop losses.