EUR/USD April 21 – Drifting higher in slow holiday trade

EUR/USD  started off the trading week with a slow grind higher. Most markets are on a long Easter holiday. The tension remains high in Ukraine, but this does not seem to affect markets too much. Will the low volume result in surprising moves?

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

• EUR/USD moved up from the 1.38 line.

Current range: 1.3800 to 1.3830

Further levels in both directions:

• Below: 1.38, 1.3830, 1.38, 1.3740, 1.37, 1.3650 and 1.3580.
• Above: 1.3830, 1.3895, 1.3964 and 1.40.
• 1.38 is strengthening as support
• 1.3830 has not been broken yet.

EUR/USD Fundamentals

• 14:00 US  CB Leading Index. Exp. +0.8%.

*All times are GMT

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

• Weak Eurozone inflation continues: There doesn’t appear to be an end in site for persistently weak inflation numbers in the Eurozone. German PPI posted a decline of -0.3%, its worst showing since December 2012.  Final inflation data for March came out slightly lower than expected. While headline inflation was confirmed at 0.5%, the lowest since 2009,  core inflation was downgraded to 0.7%,  matching the low level seen in late 2013, which was the post crisis low. The ECB has downplayed the danger of deflation, but Mario Draghi may have to abandon this “head in the sand” approach, which is weighing  heavily  on the Eurozone  economy.
• US inflation rises: The Eurozone is having a tough time with a lack of inflation, but in the US, it’s a different story.  US core inflation actually rose to 1.7%, exactly in Goldilocks territory: no deflation danger and quite far from heating inflation, despite a bloated balance sheet at the Federal Reserve.
• Is the US enjoying a spring bounce?:  Recent job figures have been OK  and  retail sales exceeded expectations. However, markets are not 100% convinced that the US is bouncing back after the harsh winter. Further evidence from the month of April, from the Philly Fed Index, added to the hopes of s serious spring bounce.
• Ukraine crisis remains in the headlines:  Reports of a violent clash with casualties in the east of the country triggered fresh worries about a Russian intervention. Putin also gave Ukraine an ultimatum regarding its gas debt. The gas supply from Russia to Europe is in danger, and this could have a significant impact on market movement.

More:  Forex Markets Likely to Goad ECB into Action