VOT Research Desk
Technical Analytics
The update to the US Consumer Price Index (CPI) fuels speculation for another 75bp Federal Reserve rate hike, and the exchange rate breaks the string of higher highs and lows that had been established since last week. Additionally, the rate may continue to give back the recovery from the yearly low (0.9864) as it does seem to be following the negative gradient in the 50-Day SMA (1.0107).
Technical Examination:
Following the unsuccessful attempt to test the 1.0220 (161.8% expansion) zone, the EUR/USD is trading back below the 50-Day SMA (1.0107), and the currency pair may follow the downward slope of the moving average to basically replicate the price movement from last month.
A fall below the yearly low (0.9864) increases the possibility for a run at the December 2002 bottom, while failure to defend the 1.0070 (161.8% expansion) sector puts the Fibonacci overlap between 0.9910 (78.6% retracement) and 0.9950 (50% expansion) back on the radar (0.9859).
The next region of interest is near the low from October 2002 (0.9685), but if there isn’t enough momentum to break or close below the overlap from 0.9910 (78.6% retracement) to 0.9950 (50% expansion), EUR/USD may stay inside the current trend.
