Dollar Extended Loss on CPI
The dollar extended its loss across the board after a government report showed the inflation rose slower than expected, raising expectations for a Fed rate cut this year. US CPI rose 0.6% as expected in March. However, the core index which excluding volatile components, food and energy prices, increased only 0.1%, half of the estimate and previous reading. The euro rose sharply from 1.3550 to 1.3593 versus the dollar following in the release.
One interesting thing is that the housing data due today were pretty strong, but the dollar failed to benefit from that. US housing starts increased 0.8% to an annual rate of 1.518 million units in March, above the forecast of 1.495 million units. US building permits rose at a rate of 1.544 million units, beating the consensus as well. It seems that any single upside surprise in economic indicators is not able to alter the overall bearish sentiment on the dollar versus the euro, sterling and Aussie.
The strong April Germany ZEW survey added fuel in the euro rally against the dollar. Germany ZEW index rose from 5.8 to 16.5, far above the estimate of 10. Germany ZEW current conditions index from 69.2 to 76.9, better than the forecast for an unchanged number.
EURUSD will face interim resistance at 1.3580, followed by 1.36 and 1.3620. Additional ceilings will emerge at 1.3650, backed by 1.3670. Support starts at 1.3550, backed by 1.3530, 1.35 and 1.3480. Subsequent floors are eyed at 1.3450.
GBPUSD Broke 2
A surprisingly strong inflation report helped to push the sterling up further, and finally helped it to break a key psychological barrier at 2 versus the dollar. UK CPI rose 0.5% in March, up from 0.4% in the previous month and above the estimate of 0.3%. UK retail price index rose 0.6%, beating the consensus of 0.4%.GBPUSD encounters interim resistance at 2.0070, backed by 2.0100, and 2.0130. Subsequent ceilings will emerge at 2.0150, followed by 2.0180 and 2.0200. On the downside, support begins at 2.0040, followed by 2.0000 and 1.9980. Additional floors are eyed at 1.9950, backed by 1.9920 and 1.99.
USDJPY encounters interim resistance at 119, backed by 119.30 and 119.50. Subsequent ceilings will emerge at 119.80, followed by 120 and 120.30. On the downside, support begins at 118.50 and 118.30, followed by 118. Additional floors are eyed at 117.70, backed by 117.50 and 117.30.