EUR/USD analysis: dollar eases ahead of US opening, but still the strongest

EUR/USD Current price: 1.1681

  • ECB's Minutes reiterated its dovish stance, didn't clarify a possible date for rate hikes.
  • USD inflation in-line with the market's expectations, not a game changer for the Fed.

The EUR/USD pair fell to a fresh weekly low of 1.1649 after the release of ECB's Minutes, which reiterated the dovish stance offered by Draghi a month ago, somehow overshadowing the recent reports that suggested some policymakers are willing to raise rates sooner. In fact, the document didn't include any detail on what "through the summer of 2019"  could actually mean. The document came as no surprise to the markets but disappointed those looking for a clearer date on a possible hike. Data coming from the EU was generally encouraging, as German harmonized CPI held at 2.1% YoY in June, as expected, rising monthly basis by just 0.1%, also matching previous and market's forecast. EU Industrial production, however, surprised to the upside, up 1.3% monthly basis in May, and by 2.4% when compared to a year earlier.

US June inflation just released came in slightly below market's expectations, up just 0.1% monthly basis vs. the previous 0.2%, although the core readings, which exclude volatile energy and foods prices, met market's forecast, up 0.2% in the month and by 2.9% yearly basis. Also, weekly unemployment claims for the week ended July 2, came in better-than-expected, printing 214K. The market didn't react to the headlines.

Ahead of the opening, Wall Street is in recovery mode, following the lead of Asian and European counterparts, with the DJIA roughly 200 points above Wednesday's close.

Now bouncing from the mentioned low, the 4 hours chart for the pair shows that it's approaching its daily high of 1.1692, the immediate resistance, but also that the upward potential is well-limited, as indicators hold within negative territory with no clear directional strength. The price is hovering around its 100 and 200 SMA, barely above them, and still below a bearish 20 SMA, now a couple of pips below the key 1.1720 Fibonacci resistance. Failure to surpass the daily high, will likely result in a lower low today.

Support levels: 1.1650 1.1620 1.1590    

Resistance levels: 1.1690 1.1720 1.1755

View Live Chart for the EUR/USD

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