EUR/USD Forecast: US CPI boosts optimism, 1.1100 coming up next
|EUR/USD Current Price: 1.1054
- The United States Consumer Price Index rose by less than anticipated in June.
- Stock markets rally on speculation the Federal Reserve could soon end the tightening cycle.
- EUR/USD bullish momentum anticipates a test of the next psychological threshold at 1.1100.
The EUR/USD pair reconquered the 1.1000 threshold during European trading hours, peaking in the session at 1.1036. The pair retained gains ahead of the release of the United States (US) Consumer Price Index (CPI) and broke higher following the data release as the monthly increase was 0.2% in June, below the 0.3% anticipated. In the same period, the CPI was up by 3% YoY, while the core annual reading printed at 4.8%, below the 5% anticipated by market participants.
The figures indicate that price pressures have continued to ease, so the need for additional monetary tightening has decreased. The US Federal Reserve (Fed) noted that further hikes are needed to fight stubbornly high inflation, yet with pressures easing month after month, an end to the current tightening cycle comes closer. The central bank anticipated at least two more 25 basis points (bps) rate hikes, which are already priced in.
Financial markets now foresee that the chance of avoiding an economic setback increased, and risk appetite has soared. European stocks extended their early rallies with the news, while Wall Street’s futures are firmly up and challenging July highs.
EUR/USD short-term technical outlook
The EUR/USD pair trades around 1.1050, advancing for a fifth consecutive day. Technical readings in the daily chart support the ongoing rally and anticipate further gains in the docket as technical indicators resume their advances within positive levels. Furthermore, the 20 Simple Moving Average (SMA) extended its bullish slope below the current level and above the longer ones.
The upward momentum is strong in the near term. The 4-hour chart shows technical indicators head firmly north near overbought readings, without signs of bullish exhaustion. At the same time, EUR/USD develops well above all its moving averages, with the 20 SMA far above the longer ones and providing dynamic support at around 1.0980.
Support levels: 1.1025 1.0980 1.0930
Resistance levels: 1.1100 1.1140 1.1185
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