Copper prices retreated significantly. It dropped below the day’s low as after the Euro zone inflation rose to a higher than expected annual rate of 8.5% in February. A according to a first estimate from the EU’s statistics agency.
The euro fell against the dollar on after data showed inflation in the euro zone was not as high. As investors had feared based on national readings in recent days. The euro was 0.5% lower against the dollar at $1.0618.
However, the market was pressured by growing expectations of rate increases by the European Central Bank (ECB). After faster than expected acceleration in consumer prices in France, Spain and Germany.
Euro zone inflation eased to 8.5% in February from 8.6% a month earlier on lower energy prices. But still came in above a predicted 8.2% in a Reuters poll of economists.
But market reaction to the data was muted after the euro rose 0.9% against the dollar on Wednesday. Its biggest daily jump in a month, after prices in German rose more than hoped last month.
Investors now see the ECB’s 2.5% deposit rate rising by a combined 100 basis points in March and May. Then to around 4.1% at the turn of the year. Markets have priced in an extra 50 basis points of hikes in just the past month.
The hotter than expected German inflation in February came after unexpectedly strong readings in France and Spain. Reinforcing the case for the European Central Bank to keep raising interest rates.
Copper prices witnessed a sharp recovery. It recovered from the low 745.75 (27 Feb 2023 low) and made a high 776.75 (yesterday). Prices gained on signs of a strong economic data from China.
Manufacturing activity in China grew at the fastest pace in more than a decade last month. Data showed on Wednesday, adding to evidence of a rebound in the world’s second-largest economy after removal of strict COVID-19 curbs.
Technical View- Copper at crucial support
Copper Futur retreated from the high of 776.75 and currently traded at 765.30 levels.
Commodity prices came in under pressure as after the Eurozone Inflation came slightly higher than forecasted figure. This field is the expectation of ECB rate hike in comding meeting.
Formation of two consecutive long bearish candlestick on the hourly chart is indicating bearish momentum in the near future.
Also, Prices broke its 100 SMA, and are trading on the verge of 50 SMA. A break below 763.50 appears to lead to correction and copper prices may retreat towards 758.50-755 very soon.
On the upside, immediate resistance is seen at 768.50-772.50 above 776.50.
Adding to this, the dollar index continued trading on a positive node and it will pressurize base metals prices too.