- EUR/USD has been extending its gradual gains as the greenback loses ground.
- US inflation is left, right, and center for the currency pair today.
- Wednesday's four-hour chart shows EUR/USD is entering overbought conditions.
EUR/USD may have been listening to President Donald Trump's complaints about the weak euro – or more likely extending its gains as speculation about a Fed rate cut mounts ahead of a critical release today. The world's most-popular currency pair is trading close to the 11-week high of 1.1348 recorded on Friday.
Trump has praised low levels of inflation – and that will come to test today. Consumer prices are expected to remain steady in the publication for May with Core CPI remaining at 2.1% year on year. Fed Chair Jerome Powell has labeled poor inflation in the first quarter as "transitory" and April's rise in core price has vindicated. The release is due one week ahead of the FOMC gathering.
See
- US CPI Preview: Heading to irrelevance?
- Why US inflation may badly disappoint and down the dollar – FXStreet Surprise Index
ECB President Mario Draghi has left the stage to US inflation and the Fed. Draghi has spoken in Frankfurt this morning and refrained from touching on monetary policy. However, he did reiterate that global trade has been facing headwinds.
And indeed, trade wars have been intensifying. China has devalued the yuan in a move that may be interpreted as a part of its struggle with the US and contrasting Trump's claim that China "badly wants a deal" while he is holding it back. Chinese inflation came out at 2.7% year on year, as expected.
Overall, without critical euro-zone indicators due today, the stage is set for US inflation to set the tone.
EUR/USD Technical Analysis
EUR/USD enjoys upside momentum on the four-hour chart but the Relative Strength Index is getting close to 70 – overbought territory – and this implies a potential slide.
1.1348 was the high point on Friday and remains a critical line. A break above it would send EUR/USD to the highest levels since late March. The next cap is at 1.1395 was a swing high back then. It is followed by 1.1445.
1.1325 held the pair down in mid-April and is the immediate support line. Next, we find the round number of 1.1300 which supported it on Tuesday, and 1.1285 which supported it earlier. 1.1250 and 1.1220 are next.
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
AUD/USD risks a deeper drop in the short term
AUD/USD rapidly left behind Wednesday’s decent advance and resumed its downward trend on the back of the intense buying pressure in the greenback, while mixed results from the domestic labour market report failed to lend support to AUD.
EUR/USD leaves the door open to a decline to 1.0600
A decent comeback in the Greenback lured sellers back into the market, motivating EUR/USD to give away the earlier advance to weekly tops around 1.0690 and shift its attention to a potential revisit of the 1.0600 neighbourhood instead.
Gold is closely monitoring geopolitics
Gold trades in positive territory above $2,380 on Thursday. Although the benchmark 10-year US Treasury bond yield holds steady following upbeat US data, XAU/USD continues to stretch higher on growing fears over a deepening conflict in the Middle East.
Bitcoin price shows strength as IMF attests to spread and intensity of BTC transactions ahead of halving
Bitcoin (BTC) price is borderline strong and weak with the brunt of the weakness being felt by altcoins. Regarding strength, it continues to close above the $60,000 threshold for seven weeks in a row.
Is the Biden administration trying to destroy the Dollar?
Confidence in Western financial markets has already been shaken enough by the 20% devaluation of the dollar over the last few years. But now the European Commission wants to hand Ukraine $300 billion seized from Russia.