The euro, the dollar's main competitor in the foreign exchange market, received support yesterday from data on industrial production in the eurozone countries. In February, the indicator rose by +1.5% (against the forecast of + 1.0%) and by +2.0% in annual terms (against expectations of +1.5%). The output of capital goods, according to other data of the Eurostat report, such as manufacturing equipment, increased by +2.2% (+10.4% year-on-year), energy production increased by +1.1%, and consumer non-durable goods by +1.9%, which indicates, if not the recovery of the European economy, at least a reduction in recession risks.

As follows from the report published today by the Ministry of Economy, the German economy managed to avoid a recession in the first quarter of this year, and "current forecasts also predict a slight growth in GDP for the whole of 2023."

Most ECB policymakers believe the bank should continue to tighten monetary stimulus and raise interest rates again by 50 basis points at its May meeting. They believe inflation is still high, and if they don't act tough now, the negative dynamics will intensify.

Today, European Central Bank representative Pierre Wunsch stated that the political decision to be made in May is to raise the rate by 25 or 50 basis points, with the size of the step largely dependent on April's core inflation. According to him, market expectations regarding the final level of the rate are reasonable, but a rapid decline in rates after that is unlikely.

As of writing, the EUR/USD pair continues to develop an upward trend, approaching the key long-term resistance level of 1.1090 and updating highs since April 2022.

Below the key resistance level of 1.1090, EUR/USD still remains in the global downward trend zone, and only a breakdown of the 1.1600 resistance level will bring the pair into the global bull market zone.

If there is no new disappointing macro data from the U.S., a rebound or, at least, stabilization near the 1.1090 level should be expected to determine the direction of further movement. So far, everything is shaping up not in favor of the dollar.

From today's news, we are waiting for the publication of March retail sales data in the U.S. at 12:30, industrial production volumes at 13:45, and preliminary estimates of U.S. consumer confidence from the University of Michigan at 14:00 (GMT).

The University of Michigan's Consumer Confidence Index and the U.S. retail sales report are the most important leading indicators of consumer spending, accounting for the majority of overall economic activity of the population, while domestic trade accounts for the largest part of GDP growth. The publication of these reports may again sharply increase the volatility in dollar quotes.