• EUR/USD has gone into a consolidation phase above 0.9800.
  • Hot inflation data from the euro area failed to lift the shared currency.
  • Quarter-end flows could help the pair extend its rebound ahead of the weekend.

EUR/USD capitalized on the broad-based selling pressure surrounding the greenback and climbed above 0.9800 on Friday. The pair seems to have gone into a consolidation phase ahead of the key inflation data from the US. Quarter-end flows could help the euro end the week on a firm footing.

Although markets remained risk-averse on Thursday, the dollar struggled to find demand and the US Dollar Index (DXY) lost nearly 1% on a daily basis. The beginning of the overdue technical correction in the DXY and retreating US Treasury bond yields helped EUR/USD preserve its recovery momentum in the second half of the week.

Meanwhile, the data published by Eurostat revealed on Friday that inflation in the euro area, as measured by the Harmonised Index of Consumer Prices (HICP), climbed to 10% on a yearly basis in September from 9.1% in August. This reading came in higher than the market expectation of 9.7% but its impact on the euro's market valuation was short-lived.

In the second half of the day, the Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred gauge of inflation, data from the US will be looked upon for fresh impetus. Investors expect the Core PCE Price Index to come in at 0.5% on a monthly basis in August. Unless this data surpasses analysts' estimates by a considerable margin, it is unlikely to provide a boost to the dollar because investors already know price pressures rose in August following the Consumer Price Index report. 

Wall Street's main indexes remain on track to open decisively higher. In case the risk rally stays intact after the PCE inflation report, the dollar is likely to continue to lose interest ahead of the weekend. Profit-taking on the last trading day of the third quarter could also help EUR/USD preserve its bullish momentum.

EUR/USD Technical Analysis

The Relative Strength Index (RSI) indicator on the four-hour chart holds above 50 and the pair continues to trade above the 50-period SMA, confirming the bullish bias. On the upside, 0.9850 (Fibonacci 61.8% retracement of the latest downtrend) aligns as initial resistance. With a four-hour close above that level, the pair could target 0.9900 (psychological level, 100-period SMA) and 0.9950 (200-period SMA).

Supports are located at 0.9800 (Fibonacci 50% retracement), 0.9750 (Fibonacci 38.2% retracement, 50-period SMA) and 0.9700 (psychological level, 20-period SMA).

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD accelerates to near 0.6820 ahead of Reserve Bank of Australia policy

AUD/USD accelerates to near 0.6820 ahead of Reserve Bank of Australia policy

The AUD/USD pair has witnessed a sharp recovery in the Tokyo session after a corrective move below 0.6780. The Aussie asset has accelerated to near 0.6820 and is expected to extend its gains toward the previous week’s high around 0.6845 amid the risk appetite profile.

AUDUSD News

EUR/USD refreshes five-month high above 1.0550 on solid risk-on profile

EUR/USD refreshes five-month high above 1.0550 on solid risk-on profile

The EUR/USD pair has refreshed its five-month high at 1.0549 in the Asian session. The major currency pair has witnessed a juggernaut rally after a responsive buying action below 1.0440 on Friday. The US Dollar has witnessed immense pressure amid the risk appetite theme.

EUR/USD News

Gold struggles around $1,800 ahead of ISM Services PMI data

Gold struggles around $1,800 ahead of ISM Services PMI data

Gold price is facing immense pressure in conquering the round-level resistance of $1,800.00 in the early Tokyo session. The precious metal is highly expected to display more gains ahead and may extend towards a fresh three-month high at $1,824.63.

Gold News

AVAX: Traders bet should be on Avalanche bulls triggering a 15% rally

AVAX: Traders bet should be on Avalanche bulls triggering a 15% rally

AVAX price has breached an inverse head-and-shoulders setup, hinting at a 13% upswing. AVAX price has broken out of a critical hurdle and pattern, signaling the start of a quick run-up. AVAX price action created an inverse head-and-shoulder setup.

Read more

The Yen, Payrolls, and the Oil price

The Yen, Payrolls, and the Oil price

US stocks wrapped their second straight week of gains, even if stocks slipped on Friday on the back of better-than-expected US Payrolls data.We have been amazed by the resilience in risky assets of late. This year has seen some incredible macro themes.

Read more

Majors

Cryptocurrencies

Signatures