The euro has started the week positively against the USD on the back of the weekend developments that Italian government may be formed in the coming week. The major has been well supported into dips, though the daily studies are remaining bearish.

Addition, the ECB’s upbeat Annual Report 2017 further strengthen the euro overnight.

Highlights:

  • “The economy grew by 2.5% and by the end of the year had recorded 18 straight quarters of growth. This represented the strongest expansion for a decade, and the broadest for two decades.” according to the ECB’s Annual Report 2017.
  • The report also revealed that “Employment rose by 1.6% to reach its highest level ever”.
  • Regarding inflation, “Headline inflation recovered from its past lows, averaging 1.5% over the year, domestic price pressures remained muted and underlying inflation lacked signs of a sustained upward trend”.
  • The ECB ended the report with a solid forecast, “we expect the pace of economic expansion to remain strong in 2018. While we remain confident that inflation will converge towards our aim over the medium term”.

Data review:

  • Germany March Trade Balance recorded a surplus of 19.2 billion euros in February 2018
  • EA annual inflation is expected to be 1.4% in March 2018, up from 1.1% in February

Data preview:

In the EA, the ECB President Draghi speaks at the Generation €uro Students’ Award Ceremony, in Frankfurt. In terms of other data, ECB minutes will also generate much trader’s interest and could provide some clues to the EURUSD near-term trading range.

Turning to US, we are particularly focusing on the US March CPI and FOMC minutes from The March meeting.

TECHNICAL VIEW

EURUSD has reached a low at 1.2215 in last Friday, its lowest level in five weeks. Post- US March jobs data the major was lifted marginally and finished the week below 14MA.

Weekly range: 1.2150-1.2450. Status: Rangebound

The major has been in a well-defined range consolidation with a solid support available at 1.2150 levels. It has been well supported into dips much closer to the bottom of the range, though the daily studies are remaining bearish.

The recent countertrend was rejected at the 80.0% fib reaction with the immediate support zone is found at 1.2215-1.2200 levels. The price needs to break the 1.2200 to tag a meaningful reversal in the near term to 1.2150. The selling practice will accelerate below 1.2150 could open to 1.2090 and 1.2050 with resistance seems to be at 1.2340 and 1.2450 levels.

Overall, we remain neutral for this week as the risk aversion will limit the downside risk.

It is important to always keep in mind the risks involved in trading with leveraged instruments.

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