- The EUR/USD turned to the downside after approaching 1.0950, falling below 1.0900.
- The US Dollar remains strong, supported by US economic data.
- Eurozone CPI and US Core PCE will be released on Friday.
The EUR/USD lost ground for the second day in a row on Thursday and dropped below 1.0900 on the back of a stronger US Dollar, which gained momentum from robust economic data. In the Eurozone, inflation data came in mixed, showing a slowdown in Spain and a rebound in Germany that did not surprise.
Data released on Thursday showed that German inflation rose slightly in June, with the annual rate increasing from 6.1% to 6.4%. Analysts pointed out that the increase was attributed to cuts in energy prices and transportation costs, without which the inflation rate would have fallen. Looking into the details, the slowdown in inflation appears to remain in place. On Friday, the Eurozone Consumer Price Index data is due. European Central Bank officials made it clear that a rate hike is coming in July, as inflation remains stubbornly high.
Federal Reserve Chair Powell reiterated his hawkish message on Thursday, stating that most policymakers expect more rate hikes this year. Adding to those comments, economic data from the US came in above expectations, with Initial Jobless Claims dropping from the highest level since 2021 to the lowest level in four weeks at 239K. A key report is due on Friday, the Core Personal Consumption Expenditure Index, which is the Fed's preferred inflation indicator. Numbers above expectations could cement a rate hike from the Fed at the next meeting.
EUR/USD short-term technical outlook
-638236656812564332.png)
The EUR/USD lost ground for the second day in a row but held above the 20-day Simple Moving Average (SMA). The pair still trades within a range, now below 1.0900 and testing the 1.0860 support area. A consolidation below this level would set up more losses for the Euro, potentially targeting 1.0800.
Risks in the short term are tilted to the downside. Technical indicators in the daily and 4-hour charts are moving south, supporting bearish pressure and suggesting another test of 1.0860. The bearish pressure will remain intact while under 1.0900. The Euro needs to surpass the 20-period SMA in the 4-hour chart and the 1.0920 zone to gain support.
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
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
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.