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EUR/USD analysis: US inflation arise doubts about aggressive easing

Written by | 1970-01-01 00:00:00 GMT

EUR/USD Current Price: 1.1257

  • US inflation rose by more than anticipated in June up by 2.1% YoY.
  • ECB’s Meeting Minutes reminded the market that policymakers are embarked on an easing path.
  • EUR/USD longer-term perspective indicating that dollar bears are not that strong.

The EUR/USD pair topped for the week at 1.1285, as the American currency remained under selling pressure throughout the first half of the day, as the market kept selling it on the back of Powell’s semiannual testimony. The negative sentiment toward the greenback cooled down following the release of US June inflation data, as the core annual CPI surpassed the market’s forecast by printing 2.1% YoY, generating some doubts about how aggressive the Fed could be with rate cuts. Furthermore, weekly unemployment claims decreased to 209K in the week ended July 5, beating the market’s expectation of 223K. Earlier in the day, the ECB’s latest meeting accounts reminded speculative interest that the European Central Bank is also in the dovish path, as the document showed that policymakers are ready to ease further as appropriate, using all the available tools, including resuming APP and cutting rates. German June inflation, also released this Thursday, came in slightly better than previously estimated, up by 0.3% and by 1.5%,  harmonized to the EU.

This Friday, Germany will release the June Wholesale Price Index, seen up by 0.2%MoM and by 1.3% YoY, while the US will publish June PPI data, hardly enough to interrupt sentiment-related trading.

EUR/USD short-term technical outlook

The EUR/USD pair has trimmed most of its Thursday’s gains, heading into the Asian opening trading in the 1.1250/60 price zone. In the daily chart, the pair is unable to settle above a mild-bearish 100 DMA, while technical indicators remain well into negative ground, somehow suggesting that the current dollar’s decline may well be temporal. For this Friday, the potential of a downward move is being limited by the 23.6% retracement of the latest daily decline at around 1.1245, the immediate support. In the 4 hours chart, the pair is still developing above a bullish 20 SMA but was unable to hold above its 200 SMA. Technical indicators hold within positive territory, the Momentum stable, and the RSI easing, skewing the scale toward the downside without confirming it.

Support levels: 1.1245 1.1215 1.1180  

Resistance levels: 1.1275 1.1310 1.1350

View Live Chart for the EUR/USD 

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