- EUR/USD closed below 50-day MA yesterday, signaling the corrective rally from the recent low of 1.1508 has ended.
- The common currency could take a beating if US publishes an above-forecast CPI reading.
The EUR/USD's corrective rally faltered on Wednesday and the pair could revisit recent lows near 1.15 should the US inflation numbers, scheduled for release at 12:30 GMT, beat estimates.
As of writing, the currency pair is trading at 1.1675 - down almost 1 percent from the weekly high of 1.1791 hit on Monday.
The common currency fell back below the bearish (descending) 50-day moving average (MA) on Wednesday, signaling the corrective rally from the June 21 low of 1.1508 has ended. The retreat could be associated with the broad-based USD rally, triggered by a sharp rise in the USD/CNY and USD/JPY pair and stellar US producer price index (PPI) figure.
Focus on inflation differential
The German final CPI release, due at 06:00 GMT, is expected to confirm that cost of living, as represented by the consumer price index (CPI), rose 2.1 percent year-on-year in June.
Meanwhile, across the pond, the CPI is expected to have risen 2.9 percent year-on-year in June. The core CPI has likely risen to 2.3 percent year-on-year from the previous month's print of 2.2 percent.
The EUR/USD pair could extend the decline further towards 1.16 if the inflation differential rises (US CPI beats estimates and German CPI is left unrevised or is revised lower) in the USD-positive manner. On the other hand, a below-forecast US CPI could put a bid under the EUR/USD pair.
EUR/USD Technical Levels
Resistance: 1.1721 (50-day moving average), 1.1791 (Monday's high), 1.1852 (June 14 high).
Support: 1.1665 (previous day's low), 1.16 (psychological support), 1.1508 (June 21 low).
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