EURUSD: short term stop before the parityEURUSD: short term stop before the parity
The US inflation data was in the market focus during the previous week. It was a missing puzzle for the current period, for the investors' sentiment in terms of the next Feds move. Inflation rate in December was standing at 0,4% for the month, in line with market expectations, same as inflation on a yearly level at 2,9%. The core inflation in December was 0,2% for the month and 3,2% on a yearly basis. As for other macro indicators posted during the previous week, the Producers Price Index in December was standing at 0,2% for the month and 3,3% for the year. Both figures were below market expectations. Retail sales in December were higher by 0,4% compared to the previous month, a bit lower from market estimate of 0,5%. The number of building permits in the US was lower by 0,7% on a monthly basis in December, while housing starts were higher by 15,8% for the month. Industrial production increased in December by 0,9% for the month and 0,5% on a yearly basis.
The full year GDP growth in Germany is -0,2% in line with market expectations. Industrial Production in the Euro Zone was standing at 0,2% in November, bringing total IP at -1,9% on a yearly basis. Inflation rate final for December in Germany is 0,5% for the month and 2,6% for the year. Figures were in line with market expectations. Inflation rate final in the Euro Zone in December was 0,4% for the month.
Supported by lower than expected inflation figures, the US Dollar continued to strengthen during the previous week. The lowest weekly level of the currency pair was 1,018 on one occasion. However, the majority of deals were conducted around the level of 1,028 level, while the highest weekly level reached was at 1,034. The RSI continues to move modestly above the oversold market side, since November last year. The moving average of 50 days continues to strongly diverge from its MA200 counterpart, without an indication of potential slowdown.
In a week ahead, there is no scheduled release of currently significant macro data which could potentially move the market toward one side. However, it should be considered that the market will closely monitor the inauguration of the new US Administration, where some volatility might emerge. In this sense, Monday, January 20th should be closely watched. As per potential eurusd moves, charts are showing potential for a short term support line at 1,20 to be tested in the coming period. This level does not represent a significant one, when looking at the longer chart frame, but only a short term stop before the eurusd parity.
Important news to watch during the week ahead are:
EUR: Producers Price Index for December in Germany, ZEW Economic Sentiment Index for January in Germany, HCOB Manufacturing PMI Flash for January in Germany, and the Euro Zone;
USD: Existing Home Sales for December, Michigan Consumer Sentiment final for January,
