EUR/USD Analysis: back to bearish on upbeat US inflation

EUR/USD Current price: 1.1297

  • EU Industrial Production fell by more than expected in December.
  • US inflation remained at 'rate hike' levels in January.

Having peaked at 1.1341 the EUR/USD pair is down daily basis, as the greenback recovered its shine following softer-than-expected EU and UK data. The EU reported December Industrial Production, which resulted worse than expected, falling by 0.9% MoM and by 4.2% YoY. The greenback got another boost from headlines indicating that, according to people familiar with the matter, US President Trump is willing to sign the latest Congressional deal to keep the government funded and avoid another shutdown.

The EUR/USD pair was flirting with the 1.1300 figure, when the US released January inflation data,  which resulted better-than-expected, backing some additional USD gains. According to the official report, inflation remained unchanged monthly basis, but rose 1.6% YoY, beating estimates of 1.5%. The core yearly CPI, which excludes volatile food and energy prices, came in at 2.2%, above the market's forecast of 2.1%.

The pair broke below the 1.1300 figure ahead of Wall Street's opening, with equities poised to extend their weekly advance amid the positive momentum of their overseas counterparts. The ongoing decline confirms that yesterday's gains were a mere correction, as the pair stalled around the 38.2% retracement of the 1.1488/1.1257 slide at 1.1345, now trading also below the 23.6% retracement of the same slump at 1.1310. According to the 4 hours chart, the bearish case is strong, as the price broke below a bearish 20 SMA, while technical indicators turned sharply lower, dipping into negative ground after briefly hovering in positive levels. The low of the range is the immediate support ahead of 1.1215, 2018 low. The mentioned Fibonacci retracements will continue to attract selling interest in the case of upward spikes.  

Support levels: 1.1260 1.1215 1.1180

Resistance levels: 1.1310 1.1345 1.1380    

View Live chart for the EUR/USD

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