Euro on the Rise Ahead of Inflation Data, US Dollar Looking to Chicago PMI for a Boost
Forex News: Despite a better than anticipated U.S. Gross Domestic Product, the US Dollar weakened Friday and the pair closed the week above 1.1700. The climb was helped by the lower than expected change in the price of all goods and services included in the GDP, which came below market expectations (GDP Price Index forecast 1.3%, actual 1.0%).Technical Outlook
The greenback continues to weaken against most of its counterparts and it seems like market participants are looking for the slightest reason to sell it (even a better than expected GDP doesn’t help). For today we expect to see a touch of 1.1775 (last week’s high) but a break or bounce will probably depend on the Euro and US Dollar data released throughout the day. It’s also possible to see a ranging session, especially if the economic data matches expectations.Fundamental Outlook
At 9:00 am GMT the Euro will be affected by the release of the European Flash Estimate CPI, which is the main gauge of inflation but because other Eurozone member states have already released inflation data, the impact of this indicator is usually medium, not high. The forecast for today is a change of 1.3%, same as previous.
On the US Dollar side we have the Chicago PMI, which is a survey of purchasing managers from the Chicago area that acts as a leading indicator of economic optimism. The expected reading is 60.8 and usually higher numbers strengthen the greenback but the impact is medium to low.
The latest drop was almost completely erased Friday and the bulls closed the week above the key level at 1.3100. Later in the day we saw a move lower but this could be attributed to end of week profit taking.Technical Outlook
The pair is headed for the resistance at 1.3160 and a break would suggest trend resumption, with higher prices to follow. However, if this barrier cannot be broken, we expect to see a drop into 1.3100 and possibly the start of a ranging period. Mondays are usually slow days and the oscillators are lacking momentum, thus adding to the possibility of a trading session confined in a relatively tight range.Fundamental Outlook
The Pound has a light economic day ahead, so the U.S. events and the technical aspect will be the main drivers for today’s price action.