EUR/USD Forecast: Bulls in control as long as 1.0280 provides support
EUR/USD Current Price: 1.0301
- The US Consumer Price Index rate contracted by more than anticipated in July.
- Wall Street soared ahead of the opening, retaining substantial gains.
- EUR/USD holds on to gains above 1.0300 and could extend its rally once above 1.0360.
The EUR/USD pair soared to 1.0368, its highest in over a month, later stabilizing in the 1.0300 price zone. The pair rallied on a broad dollar’s sell-off triggered by US inflation figures. According to the official release, the annual Consumer Price Index inflation rate contracted from 9.1% to 8.5%, better than the 8.7% expected. Also, the core reading, which excludes food and energy prices, remained steady at 5.9%, better than the 6.1% expected.
The figures brought relief to financial markets as it would leave room for the Federal Reserve to ease its aggressive quantitative tightening. Wall Street soared ahead of the opening, retaining substantial gains by the end of the American session. Earlier in the day, Germany confirmed the July CPI at 7.5% YoY as expected.
On Thursday, the US will publish the July Producer Price Index inflation, expected at 10.4% YoY, and Initial Jobless Claims for the week ended August 5, expected at 263K from 260K in the previous week.
EUR/USD short-term technical outlook
The EUR/USD pair retreated from around 1.0360, the 61.8% retracement of the daily slump measured between 1.0614 and 0.9951, but holds above the former critical resistance, now support at 1.0280. Technical readings in the daily chart favor a bullish continuation, as indicators maintain their firmly bullish slopes within positive levels, while the 20 SMA heads firmly higher below the current level. The longer moving averages, in the meantime, keep heading south far above the current level.
The 4-hour chart shows that technical indicators turned flat within overbought readings, reflecting the latest consolidation instead of signaling upward exhaustion. At the same time, the pair has broken above all of its moving averages, with the 20 SMA now advancing above the 100 SMA and en route to cross the 200 SMA.
Support levels: 1.0280 1.0240 1.0205
Resistance levels: 1.0360 1.0395 1.0440
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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.
