Euro rises as eurozone inflation data disappoint

The British pound rose slightly as the market reacted to the latest inflation data from the UK. The numbers showed that the headline inflation rate dropped to the lowest level since 2016 in April. The CPI rose by 0.8% year on year and declined by 0.2% from March. The core CPI, which excludes the volatile food and energy prices, rose by 1.4% in April year on year. The closely followed retail price index rose by just 1.5% in April. The pair also rose as the UK sold the first negative-yielding bonds ever. The pricing of these bonds sends a signal that the Bank of England will bring interest rates to negative territory in its upcoming meeting. The BOE governor, Andrew Bailey will talk about these today when he testifies to a parliamentary committee.

The euro rose today as the market ignored the weak inflation data from the eurozone. Data released by Eurostat showed that the headline CPI rose by an annual rate of 0.3% in April. As with the UK, this was the worst performance since 2016. The closely-watched core CPI rose by 0.9% year on year. Excluding tobacco, the CPI rose by 0.2%. According to Eurostat, the worst-affected countries were Slovenia, Cyprus, and Estonia, where consumer prices fell by more than 1%. On the other hand, inflation in countries like Czechia and Poland rose by more than 2%. In a statement, Goldman Sachs said it was ending its short position on the euro.

The price of crude oil rose today as the market reacted to positive data from the American Petroleum Institute (API). The numbers showed that inventories in the United States fell by more than 4.8 million barrels in the previous week. This was the biggest decline in months. Oil investors are also reacting to the reopening of economies that are going on around the world. Later today, we will get the inventories data from the United States. 

Other top news today include positive corporate earnings from Target and Lowe’s and a weekly recovery in mortgage applications in the US.

EUR/USD

The EUR/USD jumped to an intraday high of 1.0963. On the hourly chart, this price is above the 61.8% Fibonacci Retracement level. As it climbed, the price moved above the bullish pennant pattern that formed in the past two days. Also, the price is above the short and long-term moving averages. Therefore, the pair may continue rallying but bulls will need to defend levels above 1.0975, which is the highest level this week.

GBP/USD

The GBP/USD pair moved upwards slightly ahead of Bailey’s testimony. The pair is trading at 1.2248, which is a few pips below yesterday’s high. The price is slightly below the 50% Fibonacci Retracement level. It is also along the neckline of the head and shoulder pattern on the four-hour chart. The price may see some significant swings as Bailey testifies.

XBR/USD

The XBR/USD pair rose to an intraday high of 35.69, which is close to its highest level since April 7. On the four-hour chart, the price moved above the bullish pennant pattern, which is usually a bullish sign. The price is above the 25-day and 50-day EMA and slightly above the 38.2% Fibonacci Retracement level. While the pair may continue rising, there could be some volatility later today when the EIA releases its inventories data.