MyFXspot.com Trade Ideas

• EUR/USD: sell at 1.1300, take profit at 1.1100, stop-loss 1.1400

Market Overview

With growth slowing and business confidence fading, the ECB announced new stimulus measures last week to prop up a still-fragile economy, promising to put off raising interest rates and to give banks access to more multi-year loans from the central bank. The ECB said the economy was still far stronger than a few years ago, so any support should be less generous, reflecting healthier fundamentals.

The need to assess the growth outlook also provided an argument for the Governing Council to take more time to decide the terms of the loan, suggesting that the June 6 meeting is the likeliest opportunity for the ECB to publish the final terms. A key argument for providing the loans is to roll over a previous TLTRO facility and avoid a sudden reduction in the ECB's balance sheet.
U.S. Consumer Price Index increased by 0.2% mom in February, lifted by gains in the costs of food, gasoline, and rents. The CPI had been unchanged for three straight months. In the 12 months through February, the CPI rose 1.5%, the smallest gain since September 2016. The CPI increased by 1.6% on a year-on-year basis in January.

U.S. economy lost momentum at the end of last year, a trend that appears to have persisted through early 2019, with manufacturing production plunging and retail sales rising slightly in January after December's sharp drop. Slowing domestic and global growth are keeping inflation in check even as a tight labor market is driving up wages. Annual wage growth jumped 3.4% in February, the biggest increase since April 2009, from 3.1% in January.

EUR/USD continues the recovery from the last week's 1.1177 2019 low, to break the 1.1270 Fibo, which is a 23.6% retrace of the 1.1570 to 1.1177 2019 drop. There should be solid resistance at the tenkan line, which is currently at 1.1298. Only a daily close above 1.1327, 38.2% of the same 1.1570-1.1177 drop, will defer. We keep sell order at 1.1300.