18.03.201917:28 Forex Analysis & Reviews: EUR: Euro demand may remain but under a number of conditions

The euro paired with the US dollar fell in trading on Friday morning, but then regained its position amid a weak report on industrial production in the United States.

In general, the situation remains on the side of buyers of risky assets. However, for the formation of a larger growth wave, good news about the eurozone is required, as well as overcoming a number of technical levels. Today, a balance of foreign trade is expected to come out, which is unlikely to provide serious support to the euro due to trade conflicts that affect such reports.

The data on inflation in the euro area put pressure on the euro, as it completely coincided with the forecasts of economists. According to the report, the CPI eurozone in February of this year grew by only 0.3% compared with January. On an annualized basis, growth was 1.5%. The data fully coincided with the forecasts of economists.

With regard to core inflation, which does not take into account the volatile categories of goods, then the consumer price index in the eurozone in February also increased by 0.3% and 1.0% year on year. Eurozone consumer price index excluding tobacco products for the year added 1.4%.

Restrained inflation in the eurozone, on the one hand, leaves room for maneuver to the European central bank. On the other hand, its low level postpones the planned increase in interest rates in the eurozone for at least next year.

Data on industrial production in the United States disappointed investors, which led to a weakening of the US dollar on Friday. Weaker growth than expected, mainly due to lower manufacturing production, is a signal that the slowdown in the global economy is putting pressure on the US manufacturing sector.

According to the report of the Federal Reserve System, industrial production in February in the United States grew by only 0.1% compared with the previous month, while economists had expected its growth to be 0.3%. The main support was provided by the production in the utility sector, where the increase was 3.7%, which cannot be said about the situation in the manufacturing industry. According to the data, there was a decrease immediately by 0.4% compared with the previous month. Let me remind you that back in January, manufacturing production fell by 0.5%.

Data on the number of vacancies in the US in January were ignored by the market. According to a report by the US Department of Labor, the number of vacancies in January was 7.58 million.

Preliminary data on consumer sentiment did not support the US dollar, although they were better than expected. The preliminary index of consumer sentiment at the University of Michigan in March rose to 97.8 points after falling to 93.8 points at the end of February. Economists had forecast that the index would be equal to 95.3 points.

As for the technical picture of the EURUSD pair, the slow movement of the euro continues upwards. The breakthrough of resistance 1.1340 will lead to a new upward trend after several days of a pause last week, with the update of highs around 1.1370 and 1.1410. If, however, bullish sentiment is spoiled by weak data for the euro area, long positions in risky assets can be seen at the lower boundary of the side channel in the 1.1300 area.