EUR/USD: Bears reinforced ahead of the US CPI release

The EUR's failed attempt to retake the pennant has likely strengthened the bear case.
An above-forecast US CPI reading will likely add to the bearish pressure around the EUR/USD.

Omkar Godbole FXStreet Contributor

The EUR/USD closed yesterday at 1.1527 – the lowest daily close since July 20, 2017 – having faced rejection at the lower end of the pennant (former support-turned-resistance) on Wednesday.

The failure to retake the pennant on Wednesday, followed by a bearish daily close yesterday, validates the last week's pennant breakdown and has likely strengthened the case for a drop below 1.15.

Focus on the US CPI

The data, scheduled for release at 12:30 GMT, is expected to show the cost of living as represented by the consumer price index (CPI) rose 0.2 percent month-on-month in July. An above-forecast print would bolster the already bearish technical setup and open the doors to a drop below 1.15.

On the other hand, EUR/USD could have another ago at the pennant resistance (lower end of the pennant) if the US CPI prints below estimates. That said, only a daily close above the 10-day moving average (MA), currently located at 1.1603, would reduce the bearish pressure. This is because the MA has proved a tough nut to crack in the previous two trading days.

At press time, the EUR/USD is trading at 1.1532.

EUR/USD Technical Levels

Resistance: 1.1564 (5-day moving average), 1.1603 (10-day moving average), 1.1628 (Wednesday's high)

Support: 1.1508 (June 21 low), 1.1463 (daily pivot support 2 + 100-week moving average), 1.1364 (200-week moving average)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

GBP/USD resumes the downtrend, revisits 1.3230

GBP/USD remains under pressure below 1.3250 on Tuesday, giving back part of the previous day's advance. Meanwhile, Cable’s weakness follows a generalised rebound in the Greenback, particularly triggered by the sharp rally in USD/JPY.

EUR/USD stays offered, flirts with 1.1400

EUR/USD remains under selling pressure on Tuesday, trading around 1.1400 as a firmer US Dollar weighs on the pair. Softer-than-expected German inflation data for June adds to the Euro's headwinds, putting the pair on track to snap a three-day winning streak.

Gold advances modestly above $4,000

Following multi-month lows near $3,950, Gold now manages to regain some composure and reclaim the area beyond the key $4,000 yardstick per troy ounce on Wednesday. Still, any meaningful recovery appears limited as a broadly firmer US Dollar and rising US Treasury yields weigh on the yellow metal.

Ripple defends critical support, Stellar extends recovery

Ripple (XRP) trades around the key $1.00 psychological level, consolidating as the token awaits its next directional catalyst. Stellar (XLM) extends its recovery above $0.178 after posting modest gains at the start of this week.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.