FOREX Fundamental analysis for EUR/USD on May 15, 2024
No matter what statistics come out, investors will always hear what they would like to hear. Instead of reports of a 0.5% (mom) increase in producer prices in April, they talk about a 0.1% decrease in March. Instead of Jerome Powell's assurances about the extremely low probability of a rate hike in 2024, they heard that the Fed would be patient. Claes Knoth, head of the Bank of the Netherlands, announced a possible acceleration of inflation in Europe, and this, for fear of not being in time, pushed players to urgent purchases and sent the Nasdaq Composite to new records, and the EURUSD to five-week highs.
According to an analysis by S&P Global Investment Manager Index, risk appetite has reached its highest level since the end of 2021. A survey of asset managers by Bank of America showed that the market has seen the maximum number of "bulls" over the past 2.5 years. Unsurprisingly, the risks of a reversal in the euro are now at their highest since February, and the weekly indicator of the US dollar has fallen below zero for the first time in two months. In such circumstances, safe haven assets are not popular, and investors are starting to look for other methods of forex trading.
The greenback was not helped by Jerome Powell's statement that he was less confident in a further slowdown in price growth, and that it was necessary to wait for developments while carefully monitoring the dynamics of inflation. On the contrary, his remarks that the rates are already high enough to weaken demand only provoked the EURUSD bulls. A prolonged hold on rates at 5.5% could lead to a further slowdown in the US economy.
In fact, overdue credit card payments in the United States have reached their highest level in many years, and recent economic data is more upsetting than encouraging. The United States stands in stark contrast to the Eurozone, where the economic surprise index remains stable. Reducing the gap in economic growth between the Old and the New World is becoming an additional incentive for buyers of EURUSD.
The new US tariffs on $18 billion worth of Chinese goods announced by the White House do not help the dollar, although they may be a harbinger of trade wars. Customs duties on electric vehicles increased from 25% to 100%, on semiconductors and solar panels — from 25% to 50%, on steel and aluminum products — from 7.5% to 25%. Interestingly, Biden's team does not believe that such measures will lead to an acceleration of inflation, unlike Trump's intentions to impose duties of 10% on all imported products. U.S. Treasury Secretary Janet Yellen warned that China could respond. And Beijing does not deny this possibility
In short, the thirst for profit overcomes the risks of trade wars, and Jerome Powell's words only fueled interest in the April consumer price report in the United States. The reaction to it may be completely different than to the output of PPI. If the indicator exceeds forecasts, this may reduce the fuse of the EURUSD bulls and force them to take profits, which, in turn, will cause a corrective decline. But if inflation slows down, it will only strengthen interest in the euro and push the pair to the $1.108 mark.
EUR/USD Technical Analysis
Yesterday, EUR/USD was on the news on US manufacturing inflation (PPI). updated the maximum of May 3. The next target of buyers in the further development of the short-term uptrend is the target area of 1.0878 - 1.0853. If the designated zone is also broken up, then the asset will rush to the golden zone in the range of 1.0945 - 1.0937.
It is advantageous to look for new purchases of the instrument on a downward correction, starting from strong support levels of the regions 1.0744 - 1.0735 and 1.0702 - 1.0689. The first target for long positions will be today's maximum.