EUR/USD Forecast: Capped By The 50-day SMA, No Help From Higher German Inflation

• The EUR/USD is trading around $1.2300, consolidating previous losses.
• Initial German inflation figures for March are stronger than February, but it does not help the common currency. 
• The technical picture remains mixed, but the loss of the 50-day SMA may be an ominous sign.

The EUR/USD is hugging the $1.2300 level in the European session, down from a high of $1.2335. The US Dollar is gaining some ground across the board. Markets are gearing up for the long Easter weekend in some parts of the world. Portfolio managers are making adjustments as the month, quarter, and Japan's fiscal year all draw to a close. This causes some last-minute jitters.

In Europe, the main event is the release of German inflation figures. Data coming out of Hesse, Bavaria, Saxony, and other German states points to slightly higher YoY inflation in March in comparison to February. However, this is widely expected and does not help the common currency. The all-German figure is due at 12:00 GMT. Germany also reported a drop of 19,000 in the number of the unemployed, better than 15,000 that had been expected. 

Later, the US publishes the Core PCE Price Index. This is the Federal Reserve's favorite inflation measure, and it is expected to show an annual level of 1.5 percent in February, repeating the read from January. The parallel Core CPI showed no change in February: 1.8 percent. Personal Spending, Personal Income, and weekly Jobless Claims are also on the docket at 12:30 GMT. These second-tier figures will need to move in the same direction to move the markets. 

Yesterday's better than expected GDP figures helped the US Dollar. The world's largest economy grew at an annualized pace of 2.9 percent according to the final read for Q4 2017, a significant upgrade from 2.5 percent reported in the second release. The greenback rallied across the board, and the EUR/USD quickly lost its gains.

EUR/USD Technical Analysis - Worrying signs

The EUR/USD continues trading in an upward channel, but this channel is extensive and the pair slips within it. The more worrying sign is that the pair moved below the 50-day Simple Moving Average which stands at $1.2342. 

Other indicators are not going anywhere fast. The RSI is hugging the 50 level, and Momentum is absent. Nevertheless, the pair is not listless.

Support is found at $1.2240, a line that supported the pair on March 20th and March 21st. Further below, the March 1st low of $1.2155 awaits the pair before the 2017-high of $1.2090.

Looking up, immediate resistance is at the 50-day SMA mentioned earlier. $1.2360, which separated ranges several times, is weakening. The March 14th peak of $1.2412 is next. 

Live Chart of EUR/USD