Eurozone’s HICP rates in sight

In today’s European session we are noting the release of the Eurozone’s preliminary HICP rates for the month of April. Economists are currently anticipating the rate to come in at 2.4%, which would be the same as the previous reading of 2.4%. Therefore, in such a scenario, it may be inferred that inflation remains sticky in the Eurozone, which in turn may add pressure on the ECB to adopt a more hawkish rhetoric, i.e. postponing rate cuts, which in turn could provide support for the EUR. On the other hand, should the Headline CPI rate come in lower than expected, thus implying easing inflationary pressure, then the ECB may face increased pressure to maintain its dovish tone, which could weaken the EUR.In today’s Asian session, China’s Caixin and NBS Manufacturing PMI figures came in higher than expected, implying an expansion in the country’s manufacturing industry. Hence the better-than-expected PMI figures, may imply that the Chinese economy is recovering which in turn could also support the Aussie given their close economic ties.In the Equities market, Tesla’s (#TSLA) stock price jumped higher during yesterday’s trading session, following the announcement of a deal between Tesla and Baidu (#BIDU), which could boost Tesla’s future EV Car sale in the largest automobile market in the world.

EUR/USD appears to be moving in a sideways fashion, having formed a sideways moving channel on the 24 of April. We maintain a sideways bias for the pair and supporting our case is the aforementioned sideways moving channel in addition to the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. However, we would also like to note that currently from a more long term view, our upwards moving channel formed on the 16 of April continues to be validated. Hence, for our sideways bias to continue, we would require the pair to remain confined between the 1.0680 (S1) support level and the 1.0740 (R1) resistance line. On the flip side, we would immediately switch our sideways bias in favour of a bullish outlook, in the event of a clear break above the 1.0740 (R1) resistance line, with the next possible target for the bulls being the 1.0810 (R2) resistance level. Lastly, for a bearish outlook, we would require a clear break below the 1.0680 (S1) support line, with the next possible target for the bears being the key psychological support level of 1.0600 (S2).

WTICash appears to be on the cusp of breaking our upwards moving channel which was incepted on the 26 of December 2023. We maintain a sideways bias for the commodity and supporting our case is the narrowing of the Bollinger bands, which imply low market volatility, in addition to the RSI indicator below our chart which currently registers a figure near 50, implying a neutral market sentiment. Yet, as we mentioned above the commodity has at the time of this report, not broken below our aforementioned upwards moving channel, implying some residual bullish tendencies. Nonetheless, for our sideways bias to continue, we would require the commodity to break below our upwards moving channel, in addition to remaining confined between the 80.95 (S1) support level and the 85.85 (R1) resistance line. On the flip side for a bullish outlook, we would require the commodity to remain within our upwards moving channel, if not also breaking clearly above the 85.85 (R1) resistance line with the next possible target for target bulls being the 89.60 (R2) resistance level. Lastly, for a bearish outlook, we would require a clear break below the 80.95 (S1) support level with the next possible target for the bears being the 76.55 (S2) support base.

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In a busy Tuesday, we note the release of the Czech Republic’s, France’s, Germany’s and the Eurozone’s preliminary GDP rates for Q1, France’s and the Eurozone’s preliminary HICP Rates for April and from Switzerland the KOF indicator for the same month. In the American session, we get Canada’s GDP rates for February, the US consumer confidence for April and later on oil traders may be more interested in the release of the weekly API crude oil inventories figure. During tomorrow’s Asian session, RBNZ is to release its financial stability report while we also note the release of New Zealand’s employment data for Q1 and Japan’s final Jibun manufacturing PMI figure for April.