The euro snapped three days of declines against the US dollar, following US housing data that came below market expectations, adding to fears the US housing sector might be slowing momentum. However, gains were capped as the 18-nation common currency was pressured as inflation in the currency bloc remained at the weakest since October 2009, keeping pressure on the ECB to take imminent actions to prevent deflation.
EUR/USD hit a session high at 1.3851 at 08:55 GMT, after which the pair consolidated at 1.3834, adding 0.14% for the day. Support was likely to be received at April 15th low, 1.3791, while resistance was to be met at April 14th high, 1.3863.
Housing starts in the US rose by 0.946 million units in March, trailing analysts expectations of a 0.975 million gain and following a 0.920 million units added in the previous month, that was larger than initially reported.
In addition, the number of building permits rose 0.99 million in March, sharply below expectations for a 1.015 million permits and after a 1.014 million gain in the previous month.
“Housing will contribute positively to GDP this year, but not by nearly as much as in 2012 and 2013,” said Dana Saporta, director of U.S. economics research at Credit Suisse in New York, cited by Bloomberg. “We are seeing continued improvement in housing starts, but at a slower pace.”
Meanwhile, the final inflation rate in the euro zone remained unchanged from its March 31st preliminary reading, while core inflation rose less than expected.
The final reading of the annual harmonized index of consumer prices (HICP) in the euro zone remained intact in March from the preliminary reading of 0.5%, which was the weakest since October 2009. In addition, the annual core inflation rate fell to a final reading of 0.7% in March from a previously estimated gain of 0.8% and following a 1% increase in the previous month. The core HICP is seen as a more precise measure by some experts, as it excludes volatile items such as energy, food, tobacco and alcohol.
The European Central Bank is considering easing monetary policy further, in order to maintain price stability and has stated that its officials were “unanimous” in their willingness to explore new policy measures if needed. The current inflation rate is just a quarter of the central banks target of price stability in the medium term and is depressed by a strong euro.
“The ECB is resolute in its determination to maintain a high degree of monetary accommodation and to act swiftly if required,” the central bank’s president, Mario Draghi, said on April 10 in Washington, cited by Bloomberg. “The ECB’s Governing Council does not exclude further monetary policy easing and it firmly reiterates that it continues to expect the key ECB interest rates to remain at present or lower levels for an extended period of time.”
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
