- US dollar consolidates losses across the board, DXY drops to 99.68.
- US annual inflation tumbles to lowest since October 2015, markets ignore data.
The EUR/USD pair peaked at 1.0884, the highest level since May 5 after the beginning of the American session. The euro then lost momentum and pulled back trimming gains. As of writing, trades at 1.0858, the weakest level of the session.
The euro lost strength amid a stabilization of the greenback. The DXY is holding on to losses but it moved off lows. The correction of the EUR/USD after rising a hundred pips from the Asian session low has been modest compared to the slide of GBP/USD that has fallen into negative territory.
Regarding data, US April inflation numbers showed a significant decline with the annual rate falling to the lowest since October 2015. Analysts consider it will remain low but they do not see outright deflation. Market participants ignored the data. In Wall Street and Europe equity prices are mixed, while crude oil gains 7%. US yields are little change with the 10-year hovering around 0.70%.
Yannis Stournaras, a member of the European Central Bank Governing Council, said on Tuesday markets do no seem to believe the decision of the German Court regarding the purchase program will be a grave issue on monetary policy.
Technical levels
The short bias continues to favour consolidation in EUR/USD. The upside remains capped below 1.0900. A firm break above 1.0900 should point to more gains. On the flip side, 1.0850 emerges as the immediate support followed by 1.0825 (20-hour moving average) and 1.0800.
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