- EUR/USD has gone into a consolidation phase above 0.9800.
- Hot inflation data from the euro area failed to lift the shared currency.
- Quarter-end flows could help the pair extend its rebound ahead of the weekend.
EUR/USD capitalized on the broad-based selling pressure surrounding the greenback and climbed above 0.9800 on Friday. The pair seems to have gone into a consolidation phase ahead of the key inflation data from the US. Quarter-end flows could help the euro end the week on a firm footing.
Although markets remained risk-averse on Thursday, the dollar struggled to find demand and the US Dollar Index (DXY) lost nearly 1% on a daily basis. The beginning of the overdue technical correction in the DXY and retreating US Treasury bond yields helped EUR/USD preserve its recovery momentum in the second half of the week.
Meanwhile, the data published by Eurostat revealed on Friday that inflation in the euro area, as measured by the Harmonised Index of Consumer Prices (HICP), climbed to 10% on a yearly basis in September from 9.1% in August. This reading came in higher than the market expectation of 9.7% but its impact on the euro's market valuation was short-lived.
In the second half of the day, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, data from the US will be looked upon for fresh impetus. Investors expect the Core PCE Price Index to come in at 0.5% on a monthly basis in August. Unless this data surpasses analysts' estimates by a considerable margin, it is unlikely to provide a boost to the dollar because investors already know price pressures rose in August following the Consumer Price Index report.
Wall Street's main indexes remain on track to open decisively higher. In case the risk rally stays intact after the PCE inflation report, the dollar is likely to continue to lose interest ahead of the weekend. Profit-taking on the last trading day of the third quarter could also help EUR/USD preserve its bullish momentum.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart holds above 50 and the pair continues to trade above the 50-period SMA, confirming the bullish bias. On the upside, 0.9850 (Fibonacci 61.8% retracement of the latest downtrend) aligns as initial resistance. With a four-hour close above that level, the pair could target 0.9900 (psychological level, 100-period SMA) and 0.9950 (200-period SMA).
Supports are located at 0.9800 (Fibonacci 50% retracement), 0.9750 (Fibonacci 38.2% retracement, 50-period SMA) and 0.9700 (psychological level, 20-period SMA).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
AUD/USD clings to recovery gains near 0.6550 on weaker USD, upbeat mood
AUD/USD holds sizeable gains near 0.6550 in the Asian session on Monday. A sharp pullback in the US bond yields prompts some US Dollar profit-taking after US President-elect Trump named Scott Bessent as Treasury Chief. Moreover, the upbeat market mood supports the risk-sensitive Aussie.
USD/JPY tumbles over one-big figure toward 153.50
USD/JPY slides back closer to 153.50 in the Asian session on Monday. Retreating US Treasury bond yields drags the US Dollar away from a two-year top high and drives flows towards the lower-yielding Japanese Yen, though the BoJ uncertainty could limit losses for the pair.
Gold price corrects to near $2,700 on sliding US yields, US Dollar
Gold price correcxts sharply to $2,700 from a near two-week highs of $2,721 early Monday. The US Dollar pulls back from a two-year high alongside retreating US bond yields and benefits the commodity while a positive risk tone amid a likely ceasefire between Israel and Lebonan also dents the safe-haven metal.
Elections, inflation, and the bond market
The Federal Reserve believes inflation is no longer a concern for consumers and the time has come to ensure the rate of change of prices does not decline any further.
Read more
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.