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May 13 - 11:55 AM

EUR/USD - COMMENT-EUR/USD May Rise Above Key Impediments If Data Cooperates

By Christopher Romano  —  May 13 - 11:15 AM

EUR/USD struck a six-session high Monday and bulls may be looking to U.S. data as the catalyst that fuels a run towards 1.1050/1.1100.

Treasury yields US2YT=RR, US10YT=RR trading near recent lows helped EUR/USD's consolidation phase of gains off the May 1 daily low persist.

2-year spreads US2DE2=RR, which EUR/USD is correlated with, are helping support EUR/USD during this period of consolidation as they remain near recent tights and are close to breaking resistance in the -187/-185bps zone.

Investors are now focused on U.S. April PPI, CPI and retail sales to see if EUR/USD's rally extends and spreads reach new tights.

Headline producer price inflation is forecast to have increased from March, according to a Reuters Poll, which projects core CPI growth will come in below March.

Retail sales growth is estimated to have slowed sharply from the prior month.

Downside surprises to those data would lead investors to increase bets on the Fed delivering more than the 50bps of cuts for 2024 foreseen in the latest Reuters Poll.

yields could then resume their recent down trend, potentially tightening spreads beyond -187/-185bps and, thus, allowing EUR/USD to rally above the 76.4% Fibo of 1.0885-1.0602 and daily cloud.
Breaks of those impediments would bring the April and March monthly highs into focus followed by the 1.1050/1.1100 resistance zone.

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Refinitiv IFR Research/Market Commentary


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