U.S. headline CPI fell 0.3% in March with the core rate edging down 0.1%. There were no revisions to the February gains of 0.1% and 0.2%, respectively. The annual pace showed the headline slowing to a 2.4% y/y rate versus 2.7% y/y, while the core slipped to 2.0% y/y versus 2.2% y/y. Energy prices dropped 3.2% in March after a 1.0% February drop. Services costs dipped 0.1% from 0.3%. Housing was 0.1% higher after a prior 0.3% gain. Commodities were down 0.7% from -0.2%. Other goods and services were flat, but tobacco was up another 0.5% after a 0.4% February gain. Price pressures were weaker than expected last month and that could give bond markets a little lift.U.S. retail sales sharply under-performed with a 0.2% March drop and a flat ex-auto figure, following downward revisions, with surprisingly widespread retail sales declines that included drops of 1.2% for auto dealers, 1.5% for building material sales that partly unwound a 6-month string of gains thanks to mild weather, and 1.0% for gasoline service station sales.
USDJPY after US CPI and Retail Sales miss, traded under its 200-day moving average for the first time since early November, falling to 108.63, its lowest since November 17. The next support level comes in at 108.55-50 area, then 107.75.
EURUSD on the other hand, rose to 1.0629. During the day, the pair found resistance in the 1-hour chart at 1.0622, which is also the 50-period EMA. However, on the announcement of the US data, pair broke this short-term resistance (i.e. 50-period EMA) and the upper Bollinger Bands as well. This temporary strength however is likely to run out of steam, since pair currently trades downwards making a tweezer top in the hourly chart. The RSI neutral and MACD is negative. In the 4-hour chart, pair broke down the 20-period EMA, while it is traded below 50 and 200-period EMA and Parabolic SAR gives bearish signals since morning.
Therefore, since pair is likely to go back to week lows a SHORT position was taken at 1.0622, with Target 1 at 1.0610, and Target 2 at key level 1.0590.
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