Global macro overview for 22/03/2016:
The German Ifo Business Climate data was released this morning. A slight improvement can be noticed as the indicator was at the level of 106.7 points, beating expectations of 106.1 and prior reading of 105.7. Nevertheless, the next sentiment data in the form of ZEW Survey was worse than expected. The ZEW Current Situation indicator decreased to the level of 50.7 from 52.3 in the last month and was below the forecast of 53.0. The ZEW Economic Sentiment indicator declined to the level of 4.3 (5.9 expected), but was better than the last month’s figures of 1.0. In conclusion, the overall business and economic sentiment did not improve significantly despite the recent ECB actions, including expansion of the QE program. This is not a good sign and it should put more pressure on the euro. Let’s now take a look at the EUR/USD technical picture at the 4h time frame. A bull run towards the recent swing high at the level of 1.1376 did not result in another higher high in this pair. Bears took control over the market as they had pushed the price below the important support at the level of 1.1218. The next support is seen at the level of 1.1066.
The UK inflation rate was unexpectedly unchanged in February, remaining far below the Bank of England’s 2 percent goal.
The Office for National Statistics revealed this morning that the consumer price index was at the level of 0.3% (vs. 0.4% expected and 0.3% prior).
Core inflation, which excludes volatile food and energy prices, remained at the level of 1.2 percent. In conclusion, the inflation level has been stubbornly low for the last two years, largely due to lower oil prices.
The BoE Governor Mark Carney reiterated last week that there are low chances that the interest rate will be cut or that it will enter the negative territory. Thus,the next move should result in a long-time rate increase.
Let’s now take a look at the technical picture of the GBP/USD pair at 4h time frame. After making a new local high at the level of 1.4515 the market has fallen toward the 50%Fibo at the level of 1.4290, breaking the support at the level of 1.4427 with ease. Currently, it looks like bears want to push the prices even further down, towards the 61%Fibo at the level of 1.4229. Any breakout below this level will result in an immediate test of the golden trend line.
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