- A sharp decline of the US Dollar following US inflation data boosted the EUR/USD.
- The medium-term outlook for the Euro gains the US Dollar has improved.
- More US inflation data is due on Wednesday, along with Retail Sales figures.
The EUR/USD experienced a significant surge of around 200 pips due to a Dollar selloff triggered by the release of US consumer inflation data. The pair recorded its largest daily gain in months, and it appears poised to continue its upward movement.
The US Consumer Price Index (CPI) remained unchanged in October, contrary to expectations of a 0.1% increase, and the annual rate rose by 3.2%, below the previous month's 3.7%. Core inflation also slowed more than anticipated. Treasury bonds rallied, and stocks on Wall Street also rose. This combination weighed on the Greenback, causing it to tumble to monthly lows.
While the US economy continued to grow above trend, the Eurozone experienced a contraction of 0.1% during the third quarter. This divergence has supported the strength of the Dollar in recent months. The growth narrative remains unchanged; however, the US inflation data has reinforced market expectations that the Federal Reserve is unlikely to raise rates further.
More US inflation data is due on Wednesday with the release of the Producer Price Index (PPI). Additionally, the October Retail Sales report will be closely watched. Continued signs of easing inflation, coupled with a softer consumer, could keep the US Dollar vulnerable until the narrative shifts back to US economic outperformance.
EUR/USD short-term technical outlook
-638355879199048004.png)
The daily chart shows the EUR/USD pair rising above the 100-day and 200-day Simple Moving Averages (SMA) for the first time since August. Additionally, the 20-day SMA crosses above the 55-day SMA, further supporting the bullish outlook. The Relative Strength Index (RSI) is in overbought territory, but there are no signs of exhaustion.
On the 4-hour chart, the price seeks the next resistance level, disregarding the overbought readings. The next strong resistance emerges at 1.0900, and above that, at 1.0930. A correction to 1.0850 could occur without jeopardizing the current bullish cycle. Only a decline below 1.0690 would change the upward bias.
View Live Chart for the EUR/USD
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD stays below 1.1000 ahead of Fedspeak
EUR/USD moves sideways in a tight range below 1.1000 on Monday. The data from the Eurozone showed that Retail Sales rose by 0.2% on a monthly basis in August as forecast, failing to boost the Euro. Investors await comments from Fed officials.
GBP/USD struggles to recover above 1.3100
GBP/USD stays under bearish pressure and trades in the red below 1.3100 on Monday, erasing early gains. The pair is undermined by a negative shift in risk sentiment but the downside remains limited as the US Dollar struggles to build on previous week's gains.
Gold ranges around $2,650, awaits fresh clues
Spot Gold's consolidative phase continued throughout the first half of Monday after the noisy United States NFP report released last Friday. XAU/USD found near-term demand at the beginning of the week as Middle East tensions undermined the market’s mood.
Is “Uptober” here for Bitcoin?
Bitcoin stabilizes at around $63,000 on Monday. US spot Bitcoin ETF experienced outflows week-on-week. NYDIG report highlights that Bitcoin remains the best-performing asset this year, with a 49.2% year-to-date gain.
RBA widely expected to keep key interest rate unchanged amid persisting price pressures
The Reserve Bank of Australia is likely to continue bucking the trend adopted by major central banks of the dovish policy pivot, opting to maintain the policy for the seventh consecutive meeting on Tuesday.
Five best Forex brokers in 2024
VERIFIED Choosing the best Forex broker in 2024 requires careful consideration of certain essential factors. With the wide array of options available, it is crucial to find a broker that aligns with your trading style, experience level, and financial goals.