The Russian decision to halt natural gas flows to Poland and Bulgaria raised concerns that Russia may cut whole Western Europe off its gas. This has magnified downward pressure on the common currency and resulted in a steep drop on the EURUSD market. The main currency pair even dipped below 1.05 for a moment this morning. While the natural gas story is surely to continue to impact the euro in the coming days, the currency may also experience a jump in short-term volatility today in the early afternoon as two important macro reports are released.
Germany will release flash CPI data for April at 1:00 pm BST. Market expects a slight deceleration in price growth from 7.3 to 7.2% YoY. Flash CPI reading from Spain released this morning showed a much lower inflation rate than expected (8.3% YoY vs 9.0% YoY expected) suggests that a downside surprise may be looming. Half an hour after release of German CPI data, investors will be offered the first reading of US GDP for Q1 2022. Annualized growth is expected to reach 1.1%, much lower than 6.9% reported in Q4 2021.
Taking a look at EURUSD chart at H1 interval, we can see that while the pair has dipped below 1.05 this morning, it has quickly recovered above yesterday’s low in the 1.0514 area. Euro caught a bid following the launch of the European cash session and a key near-term level to watch can be found at 1.0570. Breaking above this hurdle would mean painting a higher high and could hint that the ongoing short-term trend is about to end and may be seen as a bullish signal by some.