|

EUR/USD bounces in Asia, eyes EZ CPI, US tax vote for fresh impetus

  • Bounces on fresh DXY selling.
  • Back above 50-DMA barriers at 1.1750.
  • Eurozone final CPI, US tax reforms in focus.

Fresh bids emerged for the EUR/USD pair near 1.1740 levels in early trades, which prompted a bounce back above the 50-DMA support-turned-resistance at 1.1750, as the bulls fight back control kicking-off a brand new week.

EUR/USD: Will it sustain the bounce?

Amidst broad-based US dollar weakness ahead of the US tax reform votes, the main currency pair caught a fresh bid and paused its two consecutive days of declines, now making headways towards the 1.18 handle ahead of the Eurozone final CPI figures due later in the European session. The Eurozone final CPI is expected to confirm a 1.5% reading, the seen in the prelim release.

The Euro also continues to derive some support from the upward revisions made to its growth projections by the ECB last week, while solid Eurozone fundamentals, including a raft of solid manufacturing PMI reports, also helps underpin the sentiment around the spot.

More so, Friday’s US CFTC commitment of traders’ report that showed the EUR net longs increased to the highest levels since May 2007, also lifts the sentiment around the common currency so far this session. The EUR longs increased in the current week to 114K - a change of 21k. 

Looking ahead, it remains to be seen whether the major can sustain the latest upmove, in the wake of the US political developments surrounding the tax reforms and ahead of the key US macro news, including the final GDP and durable goods data.

EUR/USD Technical Outlook

Valeria Bednarik, Chief Analyst at FXStreet, explains: “Shorter term, and according to the 4 hours chart, the risk has also turned toward the downside, as the pair settled below all of its moving averages, while the Momentum indicator entered bearish territory as the RSI indicator heads south around 42. The pair has a major support around 1.1715, where it bottomed twice in the last four weeks. Support levels: 1.1715 1.1660 1.1620. Resistance levels: 1.1770 1.1830 1.1870.”

Author

Dhwani Mehta

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

More from Dhwani Mehta
Share:

Editor's Picks

AUD/USD rejected at 0.70 as hot US CPI revived Fed hike threat

The Aussie Dollar ends Wednesday’s session with a 0.17% loss against the US Dollar, as high US inflation sent US yields higher amid expectations that the Federal Reserve may hike rates late this month. The AUD/USD trades at 0.6971 after hitting a high above 0.7000.

USD/JPY slides back below 158.00 as USD reverses post-CPI gains

USD/JPY extends the previous day's pullback from a three-week high, attracting follow-through selling and sliding below 158.00 during Thursday's Asian session. Traders remain on high alert amid speculation that authorities will step in to prop up the Japanese Yen. The US Dollar, meanwhile, reverses Wednesday's hot CPI-led gains to April 2025 highs as US bond yields retreat, further pressuring the currency pair.

Gold recovers to $4,150 as retreating US bond yields weigh on USD

Gold attracts strong buying during the Asian session on Thursday, snapping a three-day losing streak to a one-week low. Retreating US bond yields drag the US Dollar away from the April 2025 high, touched in reaction to Wednesday’s hot US CPI report, and boost the non-yielding bullion. That said, energy-driven inflation risks keep bets of a Fed rate hike firmly on the table, which should cap the precious metal.

Bitcoin falls on hot CPI: Why $80,000 support matters

Bitcoin's (BTC) most critical level to watch is near $80,000 as September's hot inflation reading pressures the crypto market, according to Glassnode. The top crypto declined within minutes of the September Consumer Price Index (CPI) release, which showed a 3.7% annual increase in headline inflation, above forecasts of 3.6%. Core inflation, which excludes food and energy prices, came in at 2.6%.

Stock futures just went red on the CPI. Here's what the bond market is pricing that equities haven't caught up to

Since late June, the bond market has been pricing in a Federal Reserve that keeps raising rates into 2027, and most US stocks have already been marked down for it. The S&P 500 hasn't, because a handful of AI-linked giants make up much of the index and their prices haven't followed the rest.

Has Bitcoin really escaped the macro forces it was built to fight?
Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?