VOT Research Desk
Early on Thursday morning in Europe, the EURUSD lost momentum and fell under 1.0000.
The market’s response to the October Consumer Price Index (CPI) data from the United States may determine how the pair performs in the second part of the day, despite the fact that the near-term technical outlook indicates a lack of buyer interest.
The US Dollar (USD) gained strength on Wednesday as a result of the risk-averse market environment, and EURUSD’s three-day winning run was broken.
The pair is struggling to overcome the negative pressure as investors continued to be cautious early on Thursday. The US Dollar Index was last observed showing modest daily gains at 110.55, up 0.75% from the previous day.
It is anticipated that the US annual CPI would drop from 8.2% in September to 8% in October. The Core CPI, which excludes volatile food and energy costs, is anticipated to decrease slightly to 6.5% from 6.6% annually.
After the October employment data indicated that annual Average Hourly Earnings had fallen to 4.7% from 5%, the USD came under intense selling pressure on Friday.
Investors’ reaction to the wage inflation component over the better-than-expected Nonfarm Payrolls growth shows that a weak CPI reading might lead to another risk rally and put significant pressure on the USD.
However, a hot inflation report with the Core CPI coming in higher than September’s reading of 6.6% might lead investors to reevaluate the probability.
EUR/USD Technical Analysis
The Fibonacci 23.6% retracement of the most recent rise, where the EURUSD was last seen trading, is at a price of little under 1.0000.
The pair might fall toward 0.9950 (Fibonacci 38.2% retracement) and 0.9920 (100-period Simple Moving Average on the four-hour chart, Fibonacci 50% retracement), if the pair confirms that level as resistance.
Before aiming for 1.0080 (the peak of the most recent upswing) and 1.0100 on the upside, EURUSD is expected to encounter temporary resistance near 1.0020. (psychological level, static level).
