- The US Dollar holds onto recent losses after US PPI and FOMC minutes.
- ECB minutes, US CPI, and Jobless Claims are due on Thursday.
- The EUR/USD pair holds steady, entering a consolidation phase in the short-term while testing a key resistance level.
The EUR/USD tested levels above 1.0630 but pulled back. The pair posted modest gains as it continues to rebound from monthly lows. The pair awaits more US inflation data while trading at a crucial area, with the US Dollar still weak as US yields continue to pull back and market sentiment remains positive.
The US Producer Price Index (PPI) rose unexpectedly in September, with the annual rate at 2.2% compared to the consensus of 1.6%. The number only boosted the Dollar moderately. Despite the hotter than expected reading, it didn't create market concerns. Later in the day, the FOMC minutes showed that some officials considered the tightening cycle done, while others suggested that they may have to raise rates one more time before year-end. The minutes reinforced the data-dependent mode of the Fed.
Thursday will be a busy day on the economic calendar. The European Central Bank (ECB) will release the minutes of its September meeting. In the US, the Consumer Price Index (CPI) for September will be a crucial report. The annual rate is expected to slow from 3.7% to 3.6%. If there is a significant upside surprise, the market will consider the possibility of more tightening for longer more seriously.
EUR/USD short-term technical outlook
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The EUR/USD is consolidating above the 20-day Simple Moving Average (SMA), but it is facing resistance at the crucial 1.0630 resistance area. The chart shows scope for more gains, with the Relative Strength Index (RSI) and Momentum moving higher. However, the overall trend remains downward.
On the 4-hour chart, the pair is testing the 1.0630 area, which contains a downtrend line, while also holding slightly above an uptrend line. Technical indicators provide no clear indication, with the RSI near 70, Momentum flattening, and the MACD showing no significant conviction. A strong breakthrough above 1.0635 should reinforce the outlook for the Euro, targeting 1.0670. On the flip side, the key short-term support stands at the 20-SMA at 1.0570, and below that, the next target is at 1.0555.
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