EUR/USD rebounds to near 0.9960, downside looks likely on hawkish Fed bets
- EUR/USD has displayed a short-lived pullback around 0.9960, more weakness is imminent.
- Soaring core CPI indicates a sheer rise in durable goods prices.
- Eurozone bulls have weakened amid rising pessimism in the trading bloc.
The EUR/USD pair has picked bids around 0.9960 in the Asian session after nosediving from a high of around 1.0180. The asset witnessed an intense sell-off after surrendering the critical support of 1.0100 after the release of surprisingly higher-than-expected US inflation data. In the Asian session, the shared currency bulls have attempted a rebound but seem short-lived and sooner will resume a downside journey towards a 19-year low at 0.9864.
A rebound in the US Consumer Price Index (CPI) has refreshed the odds of a third consecutive 75 basis point (bps) rate hike by the Federal Reserve (Fed). It seems that prolonged efforts of Fed policymakers to cool down the red-hot inflation went in vain. The decline in the headline CPI from the prior release is a result of falling gasoline prices.
While price rise index for durable goods has escalated as core CPI that doesn’t inculcate food and oil prices has stepped up to 6.3% vs. the forecasts of 6.1% and the prior release of 5.9%. This is going to trouble the households as their labor cost index data has remained subpar.
Meanwhile, eurozone bulls have weakened on a decline in ZEW Survey- Economic Sentiment. The economic data declined sharply to -60.7 against the expectations of -52 and the prior release of -54.9. A decline in the confidence of institutional investors in an economy suggests that the retail demand and investments from corporate and foreign investors are expected to drop significantly.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
