Higher energy prices pushed the Consumer price index higher last month, which rose the most in 10 months, where the CPI ticked higher to 0.4% from 0.2% previous reading, however it came in line with consensus. The core component which excludes energy prices was slightly down from 0.2% to 0.1%, hinting the upside inflationary pressure continues to be subdued, and mainly stimulated by higher energy prices.
Aftter the release; traders pushed the U.S Dollar lower, andthe worse than expected capacity utilization and industrial activities added to the ongoing pressure, where the first showed firms lowered their percentage of used resources from 78.8% to 78.7% in February, while industrial production was flat at 0.0% .
Finally the Preliminary gauge of consumer sentiment conducted by the University of Michigan showed consumers mood has dropped slightly; as the index fell from 75.3 to 74.3 which came below market expectations of 75.8.
Accordingly, U.S. data missed market expectations and showed a slight decline giving a reason to market participants that a QE3 remains possible and an earlier rate hike doesn't have enough support, Thus the U.S. dollar is under pressure again.
The EUR/USD pair has rebounded sharply from the key support around 1.3000 region, currently trading around 1.3160 thus breached the main intraday resistance at 1.3120 and pushing towards the next potential resistance at 1.3185-1.3190 area. We mentioned yesterday in our regular update that we need stability above 1.3100 and the 50-days Simple average to look for further upside potential, and indeed this technical breach could push the pair higher, and for now; 1.3190 is the main barrier towards 1.3300 area.
The GBP/USD pair sky-rocketed testing the 200-days SMA once more, around 1.5850-1.5860 area. The pair is up more than 140 pips since the today's open at 1.5712. The major support around the 50-days moving average at 1.5640-1.5650 managed to halt further decline and the intraday bias for the pair has turned very positive. Now, we should watch the potential resistance area among 1.5900-1.5950 to have a clearer view for the next possible direction.
The USD/JPY continues to correct the recent rally; however trading remains above key support levels starting from 82.65 and 81.90. Bullishness remains in favor, and we anticipate further attempts toward 84.00-85.00 major long term pivotal level, where only steady trading below 80.00 shall threaten the current bullish trend.