EURUSD was marginally up in the European session on Tuesday, going at 1.0858 after gaining 0.01% at the time of writing. France’s balance of trade improved in February standing at $-5.2 billion against the forecast $7.0 billion. Meanwhile, the January figure was revised downwards to $7.2 billion from $7.4 billion. However, the Eurozone’s largest economy, Germany, saw its trade balance remain unchanged at $21.4 billion in February, performing below the forecast $25.1 billion. The contrasting figures from the EU’s top two economies will neuter prospects of gains by the euro in Tuesday’s intra-day session.
Germany, however, reported a forecast-beating increase in industrial production in February, with a growth of 3.2% versus the consensus forecast 0.6%. This will provide some support to the euro in the absence of high-impact Eurozone data on Tuesday and Wednesday. The euro’s downside will be limited, as safe haven buying of the US dollar is likely to decline, with Israel and Hamas resuming negotiations.
However, the dollar has significant support from the declining prospects of a June interest rate cut. The US economy remains strong, with last Friday’s higher-than-expected NFP figures underlining this fact. This has seen investors reduce their bets on a June rate cut, as the Fed is likely to focus more on bringing inflation down to 2%. Minneapolis Federal Reserve President Neel Kashkari emphasized this in his statement on Monday. However, a clearer picture will be out on Wednesday when the US Consumer Price Index (CPI) figures come out.
Technical analysis
EURUSD buyers are in control as signaled by the RSI indicator. The pivot is at 1.0855 and the upside will prevail as long as the exchange rate stays above this level. The first resistance is likely to be at 1.0862, and a break above this level could build the momentum to propel the pair to test 1.0870. Alternatively, a move below the pivot point will put the sellers in control, with support established at 1.0846. If the sellers break that support, the resulting momentum could propel further downward movement to test 1.0838.
