EUR/USD clattering into familiar lows as the Greenback surges ahead of the EU's CPI release
|- The Euro is looking over the edge at further losses as the Fed-ECB divergence looks set to widen further.
- EU inflation figures due for Wednesday could push the EUR further down if the figures disappoint.
The EUR/USD is knocking further into bearish territory as the European market session gets underway, touching into 1.1630 as bears keep a firm grip on the controls.
US Federal Reserve Chairman Jerome Powell drove markets back into the Greenback on Tuesday with his Senate testimony that further cemented the Fed's plans of a gradual rate hike path looking forward, and the Fed's hawkish stance sees markets increase their focus on the divergence between the US Fed and the European Central Bank (ECB), whose dovish outlook on economic activity sees the central bank unlikely to begin lifting rates until late 2019.
Wednesday will be seeing Consumer Price Index (CPI) data at 09:00 GMT, and with the Fed-ECB policy divergence front and center of traders' focus, the y/y CPI into June, forecast to remain steady at 2%, could see the Euro resume the bearish push heading into the late week.
EUR/USD Levels to watch
The Euro-Dollar pairing's technical outlook is leaning heavily bearish with declining resistance from a falling 50-day SMA, and as FXSTreet's own Haresh Menghani noted in his EUR/USD forecast: "weakness below the trend-channel support, currently near the 1.1630 area, is likely to accelerate the fall towards the 1.1600 handle before the pair eventually drops to 1.1565 horizontal zone en-route the key 1.1500 psychological mark, YTD lows. On the flip side, any meaningful up-move back above 1.1670 level might continue to confront fresh supply around 50-day SMA, currently near the 1.1700 handle. Only a sustained move beyond the mentioned hurdle, leading to a follow-through momentum beyond 1.1745-50 resistance might negate the near-term negative outlook and assist the pair to continue with its positive momentum."
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