Technical Bias: Bearish
- EURUSD rebounds, trades above 1.06.
- Eurozone core CPI confirmed at 0.7% YoY in February.
- ZEW German investor confidence climbs to 13-month high in March.
The EURUSD advanced for a second consecutive day on Tuesday, as core Eurozone inflation was confirmed higher in February, while German investor confidence soared to a 13-month high in March.
The EURUSD climbed 0.45 percent to 1.0617, easing off an intraday high of 1.0651. The pair is testing the initial resistance at 1.0636. A clean break above this level would lead to 1.0704. On the downside, near-term support is at 1.0484.
In economic data, Eurozone consumer prices declined in February, the European Commission confirmed on Tuesday. Annual CPI in the 19-member currency zone fell 0.3 percent, compared to 0.6 percent in January.
Energy prices increased 1.6 percent in February but were down 7.9 percent compared to year-ago levels. Global crude prices are forecast to remain under pressure in the short-run as the supply glut intensifies.
So-called core inflation, which strips away volatile goods such as food and energy, rose at an annual rate of 0.7 percent in February, compared to 0.6 percent the previous month.
The European Commission also said Eurozone employment rose 0.1 percent in the fourth quarter and 0.9 percent year-on-year, adding further evidence the currency region was slowly gaining momentum.
In a separate report on Tuesday the Centre for European Economic Research (ZEW) said investor sentiment in Germany reached a 13-month high in March, a sign Europe’s largest economy had turned a corner.
The closely monitored investor confidence index rose 1.8 points to 54.8 in March. That was the fifth consecutive monthly gain and the highest level since February 2014. The euro-wide investor sentiment index surged nearly ten points to 62.4.
“Economic sentiment in Germany remains at a high level. In particular, the continuing positive development of the domestic economy confirms the expectations of the experts,” said ZEW president Clemens Fuest in a statement.
He added, “At the same time, limited progress is being made with regard to solving the Ukraine conflict and the sovereign debt crisis in Greece. This has a dampening effect on sentiment.”
A recent poll by German broadcaster ZDF found that more than half of Germans want Greece out of the Eurozone. Tensions between Greece and Germany have reached a boiling point since the far-left Syriza party assumed control of the Hellenic Parliament in January. With months of bitter negotiations still to go, patience is running out, according to a member of the German government.
“It’s now, first of all, about what the Greek government will implement in the necessary reform steps that it has promised,” said Michael Grosse-Brömer, who serves as the parliamentary whip of Chancellor Angela Merkel. “They must now finally deliver and not make a new proposal every other week.”