The U.S. dollar continued to maintain gains on the day on Friday and marks a strong close to the week. The gains come amid higher bond yields and mounting expectations of a rate hike from the Fed in the coming months.
On the economic front, data on Friday saw the release of the German PPI. Producer prices rose 0.5% on the month beating estimates of a 0.3% increase and accelerated from the 0.1% increase in the month before.
Data from Canada stood out as the annual inflation rate rose to 2.3% on the month although inflation was seen rising at a slower pace. Still, the increase to 2.3% is seen to be higher than the BoC's 2% inflation target rate. Retail sales report also showed that core retail sales excluding autos fell 0.2% on the month but picked up 0.6% on the headline retail sales. Strong revisions to retail sales data for January and February saw the retail sales rising for three consecutive months.
Earlier, the quarterly retail sales report from New Zealand showed that retail sales rose 0.1% on the quarter. This was weaker than the forecasts of a 1.0% increase. Previous quarterly retail sales data was also revised down to show a 1.4% increase.
Looking ahead, the economic calendar for the day is relatively quiet. The ECB will be releasing its financial stability report followed by the FOMC's Bostic speaking later in the day. The lack of economic data on the day is likely to keep trading subdued and could see the markets digest the information from last Friday.
EUR/USD intra-day analysis
EUR/USD (1.1754): The EUR/USD currency pair failed to make any recovery last week with Friday's price action closing at fresh lows. The common currency continues to remain weak amid strong bullish momentum from the U.S. dollar. With the euro seen inching closer to the 1.1730 level of support, we expect to see price action eventually pushing lower to this level. With the resistance level coming in near 1.1846 - 1.1824, we expect that any rebounds in price action would be limited. There is also a strong possibility that price action could break past this resistance level given the bullish divergence seen on the 4-hour Stochastics.
USD/JPY intra-day analysis
USD/JPY (111.11): The USD/JPY currency pair was seen closing on a bearish note but price action managed to recover some of those losses late on Friday. Friday's price action closed with a doji. The occurrence of this pattern near the 111.18 - 110.85 level of resistance indicates that the strong rally in USD/JPY could stall. This will need to be validated by a bearish close daily. In the near term, USD/JPY is likely to retest the resistance level before it is likely to correct towards the 109.57 - 109.43 level of support that is pending a retest.
XAU/USD intra-day analysis
XAU/USD (1288.94): Gold prices were showing signs of consolidation which potentially suggests that a short-term bottom might have been formed. Price action is likely to retrace to the upside to test the resistance level at 1304 - 1301 level. Establishing resistance here could potentially signal a downside move in gold prices once again. However, if the previous low near 1286 is not breached, we expect to see gold prices maintaining a range within the current levels.