The US Dollar continued weakening on Thursday and was being weighed down by a combination of negative factors. The greenback came under some renewed selling pressure following the release of softer than expected US consumer inflation figures, showing that the headline CPI slowed to 0.1% in September and y-o-y rate easing further to 2.3% from 2.7% in the previous month. This coupled with the US President Donald Trump's criticism over the pace of Fed rate hikes added salt to the wound and exerted some additional downward pressure.
Meanwhile, a follow-through sell-off in the US equity markets did little to benefit the greenback's safe-haven status, rather was largely offset by sliding US Treasury bond yields. The anti-dollar flows assisted the EUR/USD pair to build on this week's goodish recovery move from seven-week lows and push through 50-day SMA. The pair continued gaining some positive traction on Friday and reclaimed the 1.1600 handle during the Asian session.
Friday's economic docket features the second-tier release of final German CPI print for September and Euro-zone industrial production data. From the US, the release of Prelim UoM Consumer Sentiment is unlikely to be a game changer, but might still be looked upon for some short-term trading impetus on the last trading day of the week. Nevertheless, the pair seems all set to end with strong weekly gains for the first time in the previous three.
From a technical perspective, the pair on Thursday easily surpassed an important confluence hurdle and hence, the positive momentum seems more likely to get extended towards the 1.1620 region, marking 50% Fibonacci retracement level of the 1.1815-1.1432. A follow-through buying might now negate any near-term bearish bias and continue boosting the pair further towards reclaiming the 1.1700 handle.
On the flip side, the mentioned confluence resistance break-point near the 1.1580-85 region now seems to protect the immediate downside, which if broken might prompt some additional weakness but is likely to be limited till the 1.1550-45 support area.
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