EUR/USD bulls approach 1.0500 hurdle ahead of German Retail Sales, Fed’s preferred inflation data

• EUR/USD takes the bids to refresh intraday high.
• US Dollar extends Fed Chair Powell-inspired losses amid downbeat Treasury bond yields.
• Easing rate hike fears surrounding ECB, Fed adds strength to the EUR/USD rebound ahead of the key data/events.

EUR/USD stays on the front foot around 1.0435 while renewing its intraday top amid the broad-based US Dollar weakness during early Thursday. In doing so, the major currency pair extends the previous day’s run-up ahead of the key data from Eurozone and the United States.

The quote rose the most in a week while allowing the EUR/USD bulls to cheer the biggest monthly gains in 12 years as the US Dollar slumped after Federal Reserve Chairman Jerome Powell’s dovish remarks.

In his first public appearance after November’s Federal Open Market Committee (FOMC) meeting, Fed Chair Powell stated that it makes sense to moderate the pace of interest rate increases. The policymaker also suggested that the time to slow the pace of rate hikes could come as soon as the next meeting in December. On the same line was a member of the Fed Board of Governors Lisa D. Cook who praised the inflation data to signal that the Fed would likely take smaller steps as it moves forward.

Additionally favoring the EUR/USD bulls were the downbeat prints of the US ADP Employment Change data for November as it marked the lowest readings since January 2021 with a 127K figure for November versus the 200K forecast and 239K previous readings.

On the other hand, Eurozone inflation, as per the preliminary readings of the Harmonized Index of Consumer Prices (HICP) rose 10.0% YoY compared to 10.4% expected and 10.6% prior. However, the Core HICP remained unchanged at the all-time high of 5.0% YoY and highlights the inflation woes in the bloc. Furthermore, Germany’s Unemployment Rate rose to 5.6% in November versus 5.5% market expectations and prior. The details suggest that the Unemployment Change arrived at 17K versus 13K expected and 8K previous readout.

It should be noted that the gradual easing of the Covid-led activity controls in China joined hopes of speedy recovery from recession to also favor the EUR/USD upside.

Amid these plays, the US Dollar Index (DXY) snapped a three-day uptrend while portraying the biggest daily loss in a week, not to forget mentioning the biggest monthly fall since September 2010. It’s worth noting that the Wall Street benchmarks cheered the dovish remarks from Fed Chair while the United States 10-year Treasury bond yields reversed the early gains to end November on a negative footing around 3.61%.

Moving ahead, Germany’s Retail Sales for October, expected -2.8% YoY versus -0.9% prior, could offer immediate directions to the EUR/USD pair ahead of the Fed’s preferred inflation gauge, namely US Core Personal Consumption Expenditure (PCE) Price Index for October, expected 5.0% YoY in October versus 5.1% prior. Also important will be the monthly prints of the US ISM Manufacturing PMI for November, expected 49.8 versus 50.2 prior.

Other than the data, comments from the Federal Reserve and the European Central Bank (ECB) policymakers will also be crucial for the EUR/USD traders to watch.

Technical analysis

EUR/USD’s sustained closing beyond the 200-DMA, around 1.0370 by the press time, keeps the buyers hopeful. On the same line could be the quote’s successful rebound from the 61.8% Fibonacci retracement level of June-September downside, close to 1.0300.

That said, EUR/USD bulls keep their eyes on an upward-sloping resistance line from August 10, near 1.0500 at the latest, before targeting the late June swing high around 1.0615 and June’s peak surrounding 1.0775.