EUR/USD losses momentum after rebounding to 1.1835, remains under pressure
|- US dollar holds onto daily gains, off highs supported by US inflation data.
- EUR/USD manages to rise back above 1.1800, bearish tone intact.
The EUR/USD tumbled to 1.1791 after the release of US inflation data that showed the highest annual rate since 2008, at 5.4% and above market consensus. The US dollar later pulled back and the pair rose to 1.1835.
During the last hour, the greenback appears to be gaining momentum. As of writing, EUR/USD trades at 1.1810 down for the day, and on its way to the second-lowest daily close since early April.
The bearish pressure will remain intact while under 1.1835. The key support for EUR/USD in the short-term is seen at the July low around 1.1780.
Higher inflation boosts USD
Inflation number from June triggered the rally of the US dollar. Market participants see higher inflation could bring forward expectations of a rate hike from the Federal Reserve.
“We forecast that US headline inflation will stay above 4% through until 1Q22 with core inflation unlikely to get below 3% until the summer of next year”, mentioned analysts at ING. They argue there appears little reason to continue with asset purchases of $120bn per month. “We will look to Jerome Powell’s testimony tomorrow and the August Jackson Hole Conference for hints of an upcoming taper.”
Powell will deliver its semiannual testimony to the Congress on Wednesday. The introductory statement could be released on Tuesday during the American session.
Technical level
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