ECB rate decision and US bank earnings step up a gear

EUR/USD => The pair rises above 1.09
Goldman Sachs => The stock trades 16% lower this year
Oil => The commodity rises back over $100


 ECB rate decision

The ECB is not expected to raise interest rates or adjust monetary policy.

Inflation sits at a record high of 7.5% and is a problem for the bloc, and rising prices are hampering growth amid the fallout from the Russia war, supply chain issues, and uncertainty. The ECB has previously said that they won’t raise interest rates until the asset purchase programme comes to an end, which will be in Q3, with a rate hike soon after.

The ECB is unlikely to adjust its policy but could tweak its guidance for the bond purchases to end in early Q3. Any hawkish message could boot EURUSD, although gains are likely to be short-lived. 

U.S. PPI YoY March

U.S retail sales MoM Mach

Actual: 11.2% (0.4%)

Expected: 0.6% (1.8%)

Previous: 10%

Previous: -1.2%

ECB rate decision and US bank earnings step up a gear chart

Where next for the EUR/USD?

EUR/USD trended firmly lower at the start of the month but appeared to have found support and bounced off 1.08 support.

The push back towards 1.09 and the receding bearish bias on the MACD keep buyers hopeful. A move over 1.0950 could see buying interest pick up, opening the door to a 1.10 psychological level and bringing 1.1135 the 50 SMA to the target.

Should the support fail to hold at 1.08, sellers could push the prices towards 1.0730. 

Goldman Sachs Q1 earnings preview

Goldman Sachs will post its Q1 results ahead of the US market open and several other big banking names such as Morgan Stanley and Wells Fargo.

JP Morgan kicked off earnings season yesterday with disappointing numbers, setting the bar low. Goldman Sachs is expected to report a 33.4% decline in revenue to $11.8 billion in Q1; diluted EPS is expected at $8.95, down from $18.60 in Q1 2021.

Deal-making slowed considerably as the market mood soured amid the Russian invasion, and the bank is also up against very tough comparisons after a record year last year.

Oil looks to 6% weekly gains

Oil prices rose around 3.6% on Wednesday after jumping 6% on Tuesday, putting oil on track for substantial gains this week after two weeks of losses.

Oil prices have gained on rising supply concerns after the IEA said that Russian oil absent from the market was around 1.5 million barrels per day in April and is set to rise to 3 million in May. Meanwhile, China easing some lockdown restrictions was also helping boost the oil demand outlook, which had come under pressure during the strict Shanghai lockdown. EIA data released yesterday showed that US fuel inventories dropped by 3.65 million barrels in the week ending April 8, more than the 2 million forecasts.

The fall offset any bearish sentiment after crude oil inventories rose 9.4 million, the highest weekly climb in a year on the back of the release of the strategic reserves.

 

Support can be found at 100.20 (50 sma) and 95.30 (Feb 14 high).

Resistance for the pair can be seen at 104.60 (monthly high) and 108.00 (30 March high).

 



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