EUR/USD Analysis: EUR gains as Draghi speaks, US inflation misses
EUR/USD Current price: 1.1672
- US inflation came in below expected, putting pressure on the greenback.
- ECB revised growth modestly lower, maintained inflation outlook unchanged.
The greenback lost ground Wednesday amid lesser demand on for the perceived safe-haven currency, on the back of decreasing concerns about the trade war between the US and China. The EUR/USD pair peaked at 1.1649 but retreated below a key Fibonacci resistance, entering wait-and-see mode ahead of first tier events. The first one was the ECB that left rates unchanged as expected as largely anticipated, and just now was the turn of US August inflation. According to the official report, core CPI rose 0,1% missing the expected 0.2%, while the annual reading also disappointed, printing 2.2% vs. the expected and previous 2.4%. Weekly unemployment claims for the week to September 7 came in at 204K beating expectations of 210K, while the previous week figure was revised to 205K from 203K, anyway offset by poor inflation figures. The pair peaked on the header, as for ECB's President begins its statement.
The central bank has revised lower its GDP forecast for this year and the next ones, keeping inflation forecast unchanged. In the statement, Draghi expressed concerns about the effects of protectionism measures and repeated that the monetary policy will remain accommodative, even after assets purchases stop.
As the Q&A goes on, the pair trades at fresh weekly highs around 1.1660, finally breaking through the 23.6% retracement of August rally, and with room to extend gains up to that monthly high of 1.1733, particularly if intraday retracements meet buying interest in the 1.1630 region. In the 4 hours chart, the upward momentum is building, with a long candle developing above still directionless moving averages, and technical indicators advancing after a period of consolidation right above their midlines.
Support levels: 1.1635 1.1600 1.1570 1.1530
Resistance levels: 1.1690 1.1730 1.1770
Author
Valeria Bednarik
FXStreet
Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.
