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Forex: EUR/USD below 1.3125 ahead of German CPI

The EUR/USD is trading lower on Thursday since the early European session tumble after the release of German unemployment data, from 1.3140 down to the base of 1.31. After EMU CPI figures, the pair went for another drop, reaching the 1.3100 line.

Italian Prime Minister Mario Monti said that the new government should stick to the planned reforms and warned that granting postponement of deficit targets harms credibility. Italy's President Napolitano said it is not possible to speed up process of forming new government and EU's Barroso is confident that next Italian government won’t undermine confidence that has been building.

At 13:00 GMT, Germany will publish its preliminary CPI and HICP figures of February, with an expected +0.7% and +1.7% rise, respectively. Later, investors will focus on US annualized Q4 GDP that is expected to indicate a strong drop, from 3.1% to 0.5% growth. The quarterly figure should be revised lower from +2.7% to +0.6%.

The EUR/USD is being kept below 1.3125. “I think today the price may complete this impulse near the level of 1.3220 and then start a correction towards the target at 1.3120”, wrote Roboforex.com analyst Igor Sayadov, pointing to a potential ascending impulse to reach the target at 1.3240 and then one more correction to the same level, 1.3120.

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