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Data Keeps Euro Below Resistance

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Data Keeps Euro Below Resistance

The Euro moved higher on Tuesday but seems to have run into resistance near the top end of the range near 1.38, after traders looked for either weaker US data or strong European data as an impetus for a higher exchange rate. Wednesday’s new producer price index was not the catalyst that lifted the Euro to higher levels.

The Labor Department released a new PPI today, one that has been in beta for a number of years which includes services and reduces the weight of food and energy. The headline Producer Price Index has been broadened to include services, in a nod to the sector’s rapid expansion, and will now be referred to as PPI final demand. The index, previously known as PPI for finished goods, will also include construction.

The producer price index rose 0.2% from the previous month in January after gaining 0.1% in December. Excluding food and energy, prices were up 0.2% after remaining unchanged in December. Economists predicted both measures would rise 0.1%.The January numbers represent year-over-year increases of 1.2% and 1.3%, respectively.

In other economic news in the US, Household debt rose by $241 billion in Q4 to $11.52 trillion, a NY Fed report shows, with the increase the highest since Q3 2007. Mortgages rose by $16 billion year over year to $8.05 trillion following four consecutive years of declines. The consumer is borrowing more than expected and that is likely to generate higher growth.

chart-data-keeps-euro-resistance.png

The EURUSD moved above prior resistance near 1.3790, and is poised to test the December highs near 1.3850. Support is seen near the 10-day moving average near 1.3670. Momentum is strong as the MACD (moving average convergence divergence) index is printing in positive territory with an upward sloping trajectory. The RSI is moving higher with price action reflecting accelerating momentum while printing near 61, which is on the upper end of the neutral range.

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