On Wednesday, the EURUSD gained strength and made significant gains. On Thursday, the pair maintained its surge and reached its highest level since March 2022 at 1.1150. Following the recent advance, the pair has become overbought. Suggesting that investors should wait for a technical pullback before banking on further gains.
Soft US inflation statistics weighed hard on the US Dollar (USD). On Wednesday, fueling the EURUSD remarkable rise. In June, the Consumer Price Index (CPI) increased by 3% year on year. May’s gain was 4%, while the monthly CPI and Core CPI both increased by 0.2%. Following this data. Investors estimate a minimal likelihood of the US Federal Reserve boosting policy rates twice more this year. Making it harder for the USD to find demand.
It’s worth noting that Minneapolis Fed President Neel Kashkari underlined on Thursday that policy rates may need to rise if inflation persists longer than projected. Similarly, Richmond Fed President Thomas Barkin stated that he is willing to tighten policy further if incoming data does not demonstrate that inflation will return to the 2% objective.
Market players will be eagerly watching US producer inflation data.
Although these remarks did not assist the USD in gaining a foothold. The currency might minimize its losses in case Despite the recent slowing of inflation. Fed policymakers are attempting to persuade investors. That two more rate rises this year are still the most likely scenario. The Fed’s blackout period begins on Saturday, and officials will have Thursday. And Friday to sway market expectations if they so want.
The Producer Price Index (PPI) data for June will be released in the second half of the day on the US economic calendar. The PPI is expected to gain 0.2% on a monthly basis, following a 0.3% fall in May. A unfavorable reading is expected to keep the USD on the defensive. A stronger than expected result might help the currency launch a recovery, at least in the short term.
EURUSD Technical Outlook
The four hour chart’s Relative Strength Index (RSI) indicator remains above 80, and EURUSD trades roughly 100 pips above the upper limit of the ascending regression channel formed in early June, confirming overbought circumstances.
If EURUSD confirms 1.1160 (April 2022 static level) as support, 1.1200 and 1.1270 (March 2022 static level) might be set as following positive objectives.
Supports for EURUSD are found around 1.1100. , 1.1050 (20 period Simple Moving Average (SMA), mid point of ascending channel), and 1.1000 .
