EUR/USD fades a bounce to 1.3740

FXStreet (Edinburgh) - After dipping to 4-week lows near the 1.3700 handle, the EUR/USD attempted a bull run to 1.3740, although it failed to follow through so far.

EUR/USD focus on German CPI

Auspicious results from EMU’s Consumer Confidence and Economic Sentiment in March – both exceeding expectations - would be supporting the pair, although market participants are eagerly waiting for the advanced inflation figures in Germany (headline CPI 1.1% YoY, HICP 1% YoY exp.). “While yesterday’s weak money and credit growth figures argue in favour of further monetary easing, the further brightening in economic sentiment in March will strengthen the hands of the hawks on the ECB’s governing council in making the case for continued inaction at next week’s policy meeting. As a comprise, the ECB’s governing council may opt to strengthen its forward guidance a bit, for example by adding some flavour to the time frame during which policy rates are expected to remain low”, assessed Martin van Vliet, Analyst at ING Bank NV.

EUR/USD levels to watch

At the moment the pair is down 0.04% at 1.3733 with the next support at 1.3694 (low Feb.28) ahead of 1.3685 9daily cloud top) and then 1.3647 (daily cloud base). On the flip side a break above 1.3797 (high Mar.27) would open the door to 1.3825 (21-d MA) and finally 1.3827 (high Mar.26).