The Euro continued to rally ahead of key Eurozone economic data. Eurostat will release the bloc’s consumer inflation flash data. Analysts expect the data to show the headline CPI rose from 7.4% to 7.7%, which will be the biggest increase on record. Core CPI, which excludes volatile food and energy products, is expected to rise from 3.5% to 3.7%. This increase is expected to be broad based, with companies like Italy and France expected to post robust inflation growth. On Monday, data from Spain and Germany showed inflation continued to rise in May. The situation will continue to deteriorate as the EC considers a ban on Russian energy.
Global stocks continued to rise as investors applauded China’s ongoing reopening and new stimulus measures. In a statement over the weekend, Shanghai’s vice mayor said authorities would ease restrictions under which businesses can resume work. Another catalyst for the recovery is recent data from the United States which showed that consumers increased their spending even as the cost of living increased. Yet there are fears that the challenges that caused the crisis are still in place. They include the hawkish Fed and the current crisis in Ukraine.
The Australian dollar continued its rally after a series of important economic data from the country. According to the Australian Bureau of Statistics, building approvals have returned to growth after falling 18.5% in March. Similarly, companies saw their gross operating profit jump by more than 4% in the fourth quarter. Meanwhile, data from China revealed that the manufacturing sector rose slightly in May as some manufacturers restarted their factories. Later today, some of the key data to watch will be the latest German unemployment rate and mortgage approvals and Bank of England lending data.
The EURUSD pair continued its bullish trend ahead of the preliminary EU inflation data. It is trading at 1.0778, which was slightly above the rising trend line shown in yellow. The price is also supported by the 25-day moving average and the 61.8% Fibonacci retracement level. The MACD is slightly above the neutral level. Therefore, the pair will likely continue higher as talk of a hawkish ECB continues.
The EURJPY pair continued to rise as it hit its highest level since May 17th. It broke above the important resistance level at 136.78, which was the May 24th high. It broke above the key resistance level at 136.78 and the ascending trendline shown in white. The Relative Strength Index (RSI) approached the overbought level while the ADX index was pointing higher. Therefore, the pair will likely continue to rise in the near term.
The USDCAD pair continued to move in a downtrend as the decline in the US Dollar accelerated. It fell to a low of 1.2658, which was the lowest level since April 25. The pair managed to break below the important support level at 1.2767, which was the May 25th low. It remains below the 25 and 50 day levels. moving averages while the Stochastic Oscillator and Relative Strength Index (RSI) reached the oversold level. Therefore, the pair will likely continue its downtrend.