EUR/USD back to the 1.0550 area after sharp moves following US CPI
|- US April inflation data above expectations triggers volatility.
- US dollar jumps across the board and then tumbles.
- EUR/USD remains sideways in the recent range.
The EUR/USD is marginally higher on Wednesday as it trades around 1.0550 after making sharp moves following the April US CPI. The dollar is falling but is off lows.
Dollar drops as yields pullback and stock rise
The greenback weakened on Wednesday after economic data and amid an improvement in risk sentiment. The Dow Jones is rising by 1.24%, and the Nasdaq gains 0.33% after a negative opening. At the same time, the US 10-year yield stands at 2.96% after reaching 3.07% following the CPI report.
Inflation in the US rose 8.3% in April compared to a year ago; the number was above the 8.1% consensus and marked a slowdown from the 41-year high March reading of 8.5%. The core numbers also rose above expectations, sending the dollar to the upside immediately after the numbers were released.
“The positive surprise in core prices will not be favorable for currencies not named the US dollar. We think the market is far too premature in reducing the Fed's optionality set for tightening. This should leave the USD resilient for now,” said analysts at TD Securities.
Despite volatility, EUR/USD continues to trade sideways, in a range unable to move away from the 1.0550 area. A close above 1.0600 should point to more gains ahead, while on the flip side, the 1.0500 is the immediate support followed by the critical area of 1.0480 that, if broken, could trigger a bearish acceleration.
Technical levels
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