Market Analytics and Considerations
Key Notes
While anticipating the crucial US CPI data on Thursday, the EUR/USD has given up its gains and is currently trading flat at about 1.0750. The duo moves to the negative as the US dollar strengthens, prudence reigns, and US Treasury bond rates decline.
Stationary resistance seems to have developed at 1.0770 depending on this week’s trading thus far. Above a certain point, the psychological and stationary marks of 1.0800 & 1.0840 can be considered the next objectives for bullish movement.
On the negative, 1.0700 (psychological threshold, stationary tier), 1.0650, and 1.0730 (stationary tier, 20-period Simple Moving Average (SMA)) connect as the initial supports 50-activity SMA, 100- activity period SMA
After reaching its peak level as mid – May at 1.0776 on Wednesday, EUR/USD has indeed moved marginally down in the early hours of Thursday AM Europe. The duo’s overvalued characteristics have not yet been resolved, based on the relatively close technical outlook, but traders may disregard this and instead focus on US inflation figures.
Olli Rehn, a member of the ECB’s Governing Council, stated on Wednesday stated price hikes will continue to be required over the course of the forthcoming meetings in order to reach restraint and reduce inflation.
The US Dollar is most likely to come under further price pressure in the eventuality that the month core inflation statistic is in accordance with or less than market consensus, allowing EUR/USD to build traction. According to the CME Group FedWatch Tool, the possibility of a 25 basis point (bps) Fed rate increase in February is factored inside at 77%. According to market skew, there is further scope for the US Dollar and US T-bond yields to tumble in the event that markets are persuaded that there will be a 25 bps increase following inflation data.
On the contrary hand, an unanticipated rise in the monthly Headline CPI ought to have a significant impact on Wall Street’s key indices and result in a clear comeback for the US Dollar, leading to a big decline in EUR/USD, at least initially.
