The euro rallied against the greenback in the final trading session of last week after the release of weak US retail sales data for March. The German wholesale price index data for March met the market’s expectations. This enabled the EUR/USD pair to rally from a low of 1.0830 to a high of 1.1075.
According to German statistical agency Destatis, the country’s wholesale price index grew by 0.20% m-o-m in March, following a 0.10% rise in the earlier month and in line with economists’ estimates.
On a y-o-y basis, the country’s wholesale price index rose by 2% in March 2023.
The annual increase was led by a 16.40% rise in the prices of food, beverages, and tobacco. In particular, meat and meat products posted a surge of 20% y-o-y in March 2023. While fruit, vegetables, and potatoes recorded an increase of 20% y-o-y in March 2023, milk, dairy products, eggs, and edible oils and fats reported a jump of 19.80%. Similarly, living animals recorded an increase of 37.60% in March, while building materials and elements posted a growth of 19.80% in the same period.
According to the final data published by INSEE (the National Institute of Statistics and Economic Studies), the French consumer price index inched up 0.90% m-o-m in March, following a 1% growth in the previous month and a notch higher than the initial estimate of a 0.80% increase. Economists did not anticipate any change in the initial estimate.
The energy prices rose by only 0.20% m-o-m in March following a 1.60% rise in the previous month. Likewise, services grew by 0.1% in March following a 0.80% rise in February. Transport service prices fell by 1%. Also, the prices of food increased by 1.80%. While manufactured goods grew by 1.50%, tobacco prices rose by 7.60%.
On a y-o-y basis, French consumer prices surged 5.70% in March 2023. Also, core inflation jumped 6.20% y-o-y in March.
According to the US Census Bureau, the country’s retail sales fell by 1% m-o-m in March, following a decline of 0.20% in the previous month and worse than the 0.40% decline anticipated by economists.
The decline was led by a 5.50% drop in gasoline stations. Also, merchandise stores posted a decrease of 5.50%. General merchandise stores reported a decline of 3%. While building materials and garden equipment fell by 2.10%, electronics, and appliances reported a drop of 2.10%. Clothing and motor vehicle dealers fell by 1.70% and 1.60%, respectively.
On the contrary, sales at food and beverage stores inched up 0.10%. similarly, non-store retailers and food services and drinking places posted a growth of 1.90% and 0.10%, respectively.
Excluding volatile goods such as autos and gasoline, sales fell by 0.30%. Online sales grew by 1.90%
According to the data published by the US Federal Reserve, the country’s capacity utilization rate inched up to 79.80% in March from 79.60% in the previous month and surpassed forecasts of 79.10%.
In a separate news release, the US Federal Reserve stated that the company’s industrial production inched up 0.40% m-o-m in March, following a 0.20% growth in the previous month and a notch higher than forecasts of a 0.20% rise.
The index for utilities rose by 8.40% while that of manufacturing output fell by 0.50%. Also, the indexes for durable and nondurable manufacturing inched down by 0.90% and 0.10% in March, respectively. Mining output declined by 0.50%.
The weak retail sales data is expected to keep the EUR/USD pair slightly bullish in the short term.
The historical price chart indicates that the EUR/USD pair is rising after bouncing off the support level at 1.0505. The next resistance is anticipated only near 1.1460. Additionally, the currency pair is trading above its 50-day moving average while the stochastic indicator is in the bullish zone. Therefore, we anticipate the EUR/USD pair to remain in an uptrend in the days ahead.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
