EUR/USD Analysis: upbeat US inflation gave the greenback a breathe

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1275

ECB´s Minutes showed policymakers are ready to ease further as appropriate.
US June inflation resulted upbeat, taking some pressure off the greenback.
EUR/USD battling with critical Fibonacci resistance, scope to test the 1.1300 level.

The EUR/USD pair has reached 1.1280 overnight, underpinned by dollar’s persistent weakness following Fed’s Chief Powell testimony on monetary policy before a special Congressional commission. The pair consolidated at higher ground for most of the European session, resuming its advance to fresh weekly highs ahead of the release of US data, as speculative interest continues pricing in a steeper easing in the US before year end.

The shared currency remained strong despite the ECB’s Meeting accounts showed that EU policymakers are ready to ease further as appropriate, using all the available tools, including resuming APP and cutting rates. The news didn’t surprise the market as additional easing in the Union has been already priced in. Germany released the final version of June inflation, which came in slightly better than previously estimated, up by 0.3% and by 1.5% when harmonized to the EU.

The USD got some relief following the release of US data, better-than-expected, as June inflation figures were revised higher. Core CPI was up by 2.1% YoY and by 0.3% MoM, partially offsetting the sour sentiment triggered by Powell. Also, weekly unemployment claims decreased to 209K in the week ended July 5, beating the market’s expectation of 223K. Later today, Fed’s head Powell, will once again testify in the Congress before a different commission, but he is not expected to add anything new.

EUR/USD short-term technical outlook

The EUR/USD pair eased just modestly from 1.1285, so far the daily high, as the strong momentum in equities keeps high-yielding currencies on demand. The pair is currently struggling with the 38.2% retracement of its latest downward move, holding below the 100 SMA but finding intraday support around the 200 SMA in the 4 hours chart, and with the 20 SMA gaining strength upward currently at around 1.1230. Technical indicators have lost directional strength, holding near overbought territory, all of which maintains the risk skewed to the upside.

Support levels: 1.1230 1.1195 1.1150

Resistance levels: 1.1300 1.1340 1.1385

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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