The renewed uptick seen in EUR/USD ran into resistance at Tuesday’s high of 1.1225 in early Europe, knocking-off rate back to 1.12 handle.
EUR/USD awaits US CPI and FOMC
Over the last hour, the spot fights hard to keep the 1.12 handle, deriving support from upbeat Eurozone industrial production and employment data, while cross-driven strength also offers some respite to the EUR bulls.
The cross in EUR/GBP rallies above 0.8800 levels amid broad GBP weakness, following disappointing UK wages data and on reports that a deal between DUP and UK PM May could be delayed until next week.
However, the downside bias remains intact amid a broad based recovery in the US dollar, as markets clear out USD shorts ahead of the crucial US CPI report and FOMC interest rate decision due later in the US session.
Analysts at TDS expect, “Both headline and core CPI to disappoint market expectations. For headline CPI, we look for a combination of base effects and a 0.1% monthly decline to drive a deceleration to 1.9% y/y from 2.2% y/y in April (market: 0.0% m/m, 2.0% y/y).”
EUR/USD Technical Levels
Slobodan Drvenica Windsor Brokers Ltd noted: “Daily technicals maintain overall bullish structure, however, risk of deeper pullback is in play and could be triggered on loss of 1.1166 pivot (Friday’s low) which would expose next strong support and breakpoint at 1.1109 (30 May higher low / near Fibo 38.2% of 1.0839/1.1285 upleg).
Conversely, firm break above daily Tenkan-sen / 10SMA (1.1225/31) would generate bullish signal for renewed attempt towards 1.1300 target (08 Nov 2016 high) and extension of broader uptrend from 2017 low at 1.0340,” Slobodan added.
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