According to the data published at the beginning of today's European trading session, the producer price index of Germany (PPI) came out at + 0.4% (the forecast was + 0.2%) and + 3.4% in annual terms (+ 3.2% on Forecast). Thus, in April, the annual growth rate of producer prices in Germany was the strongest in more than five years. Excluding energy prices, Germany's PPI grew by 2.8% (in annual terms) with the growth of this indicator was the highest since October 2001.
As previously reported, Germany's harmonized index of consumer prices in April rose by 2.0% (against growth of 1.5% in March), exceeding the target inflation rate set by the ECB, which is slightly less than 2%.
The rise in producer prices may further push upward pressure on consumer price inflation in Germany, whose economy is the locomotive of the entire European economy.
The euro reacted with growth to the data presented. The EUR/USD pair adds 20 points at the beginning of the European session, resuming the active growth observed on the previous close. Yesterday, the dollar attempted to recover in the foreign exchange market after the US Treasury Secretary Stephen Mnuchin and the president of the Federal Reserve Bank of Cleveland, Loretta Mester, made statements that once again returned to the markets hopes for an increase in the interest rate at the June Fed meeting.
Stock indices and the US dollar recovered on Thursday after the strongest sell-off of the year. Th WSJ dollar index, estimating its rate to the basket of 16 currencies, rose by 0.5%. On Wednesday, the dollar held the worst session since March amid renewed political turmoil in the US, linked to ballyhoo around President Donald Trump.
Investors will now follow the publication at 14:00 (GMT) of the eurozone consumer confidence indicator for May (preliminary value). The growth of the indicator will strengthen the euro, and conversely, a weaker than the previous value (-3.6) of the indicator, will weaken the euro.
The EUR/USD pair is developing positive dynamics in the upward channels on the 4-hour and daily charts. At the beginning of the European session, the pair was trading near the upper border of the channel on the daily chart (level 1.1160).
Technical indicators (OsMA and Stochastic) on the 1-hour, 4-hour, daily, weekly charts are on the buyers side.
In the case of continued growth, the nearest targets will be the levels 1.1280 (Fibonacci level 23.8% of corrective growth from the lows reached in February 2015 in the last wave of global decline of the pair from 1.3900 level), 1.1340 (EMA144 on the weekly chart).
In case of rebound from the level of 1.1160 and return to the zone below the support level 1.1100, the decline in the EUR/USD pair may accelerate into the channel. Strong levels of support are also the levels 1.1020, 1.1000, 1.0950. The breakdown of the support level 1.0830 (EMA200 on the daily chart) will cancel the uptrend.
Support levels: 1.1100, 1.1080, 1.1020, 1.1000, 1.0950, 1.0900, 1.0875, 1.0830
Resistance levels: 1.1160, 1.1200, 1.1280, 1.1340
Trading recommendations
Sell Stop 1.1090. Stop-Loss 1.1140. Objectives 1.1080, 1.1020, 1.1000, 1.0950, 1.0900, 1.0875, 1.0830
Buy in the market. Stop-Loss 1.1090. Objectives 1.1160, 1.1200, 1.1280. 1.1340