Two trades to watch: EUR/USD, USD/CAD

EUR/USD rises post German PPI, ahead of the French election debate

EURUSD is rising after two days of declines and after stronger than expected German PPI inflation.

German PPI jumped to 30.9% YoY in March, up from 25.9% and a fresh record high as energy prices surged in the fallout from the Russian war.

Looking ahead, the common currency will focus on the Frech election debate between Macron and far-right nationalist Marine Le Pen. Any sense that Le Pen is gaining in popularity could drag the euro lower.

The USD  is falling lower, retreating from multi-year highs, ahead of mid-tier data – home sales and Fed beige bool. Fed Evans and Bostic both said that a 75-basis point rate hike wasn’t on their radar.

Where next for EUR/USD?

EURUSD has been trending lower since the middle of last year, forming a series of lower lows and lower highs.

It trades below its falling trendline, its 50 & 100 sma. The price recently rebounded lower off the 50 sma falling to 0.7560, a 23-month low last week.

While the price has managed to pick up off this low and recapture 1.08, the picture is still bearish.

Buyers would need to retake resistance e at 1.0840, the 50 SMA on the 4-hour chart, in order to approach the next hurdle to 1.09 round number at 1.0930.

Meanwhile, support can be seen at 1.0760, the 2022 low ahead of 1.0730, the March 2020 low.

USD/CAD falls ahead of Canadian inflation data

USDCAD is falling back below 1.26 after four days of gains.

The loonie fell yesterday following a significant drop in home starts suggesting that rising interest rates are cooling the housing market. Today, CAD is finding strength from rising oil prices.

Oil trades 1.5% higher, rebounding from sharp losses yesterday as supply concerns dominate after lower US inventories and OPEC+ production.

Looking ahead, Canadian inflation data is expected to show a jump in CPI to 6.1% YoY. The data comes after the BoC hiked interest rates by 50 basis points last week. Hot inflation data could prompt bets that the BoC will hike again.

The USD is easing lower after reaching a multi-year high yesterday and ahead of home sales and the Fed’s beige book, neither of which is particularly market moving.

Where next for USD/CAD?

USDCAD faced rejection at the 50 SMA and rising trendline support, falling back through 1.26. The price is testing support at 1.2570, a level which has offered support across the last week, while the upside remains capped by the 50 sma.

Sellers will need to see a breakthrough of 1.2570 in order to look towards 1.25, a level that has offered support and resistance on several occasions across the past year before bringing 1.2420 into play.

Buyers will be looking for a move over the 50 sma at 1.2650 and above the rising trendline to open the door to 1.2790, the January high.