- Thursday's hotter-than-expected US core CPI figures helped ease the USD bearish pressure.
- ECB minutes reinforce speculations of further easing but did little to provide any impetus.
- Friday's second-tier Euro-zone data/US PPI eyed for some short-term trading opportunities.
The EUR/USD pair had a good two-way price moves on Thursday and was solely influenced by the US Dollar price dynamics. The pair initially climbed to a fresh weekly high level of 1.1286 amid persistent USD selling bias, led by the Fed Chair Jerome Powell's dovish comments and reviving hopes of a 50 bps rate cut. The positive momentum, however, started losing the steam following the release of hotter-than-expected US consumer inflation figures, which tempered expectations for an aggressive Fed rate cut later this month and provided a much-needed respite to the USD bulls.
In fact, the headline CPI decelerated to 1.6% yearly rate in June as compared to 1.8% recorded in the previous month but was in line with market expectations. On the other hand, core CPI - excluding food and energy prices, jumped 0.3% in June and marked the largest increase since January 2018. Moreover, the yearly core CPI rate edged higher to 2.1% as against consensus estimates pointing to a stable reading of 2.0% and showed signs of a pick-up in the underlying inflation. The data triggered a sharp upsurge in the US Treasury bond yields, which underpinned demand for the greenback and prompted some selling at higher levels.
Meanwhile, the release of account of the ECB monetary policy meeting in June reinforced speculations of additional monetary stimulus by the central bank in the near-term. However, given that further easing has already been priced in the market, the news did little to surprise and failed to provide any meaningful impetus. The pair managed to regain some positive traction during the Asian session on Friday and has now climbed back closer to weekly tops, though traders are likely to wait a sustained move beyond the overnight swing higher before positioning for any further appreciating move.
Friday's economic docket features the release of German Wholesale Price Index and Euro-zone industrial production data. Later during the early North-American session, the US PPI print for the month of June, though is unlikely to be a game-changer, might produce some short-term trading opportunities on the last trading day of the week.
From a technical perspective, bullish traders are likely to wait for a sustained strength above the 1.1280 confluence region - comprising of 100-day SMA and 38.2% Fibo. level of the 1.1412-1.1194 recent downfall, above which the pair seems all set to surpass the 1.1300 round figure mark test its next major resistance near the 1.1325-30 region - coinciding with 61.8% Fibo. level. A follow-through buying will negate any near-term bearish bias and assist the pair to aim towards reclaiming the 1.1400 handle with some intermediate resistance near the 1.1365-70 region.
On the flip side, the 23.6% Fibo. level - around the 1.1245 area now seems to have emerged as an immediate support, which if broken might turn the pair vulnerable to accelerate the slide further towards challenging the 1.1200 round figure mark. Failure to defend the mentioned handle, leading to a subsequent slide below the 1.1185-80 region will indicate the resumption of the prior bearish trend and pave the way for a subsequent downfall towards the 1.1125 horizontal support en-route yearly lows - just ahead of the 1.1100 handle.
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