Brace for the U.S. Inflation Figures!
The EUR/USD was closed at $1.1859 after placing a high of $1.1881 and a low of $1.1836. EUR/USD broke its 2-days bullish streak and fell on Monday amid the strength of the U.S. dollar. The U.S. dollar was strong across the board as the attention of investors was diverted to the release of inflation data that is due on Tuesday and the congressional testimony by the Federal Reserve Chairman Jerome Powell that is scheduled later for the week. The U.S. Dollar Index that measures the greenback value against the basket of six major currencies, rose to 92.42 level and supported the greenback. Whereas the benchmark U.S. Treasury Yields on 10-year note remained steady on Monday at 1.36%.
Meanwhile, the ministers of Finance and Economic of the Eurogroup held a meeting on Monday with the U.S. Treasury Secretary, Janet Yellen, to discuss the financial and banking stability and the recovery after the pandemic. According to the sources, the debate will focus on economic policies to accelerate economic recovery and maintain and strengthen transatlantic ties in the economic sphere. More importantly, rebuilding ties that were temporarily weakened in the presidential mandate of Donald Trump.
On the data front, there was no data released on Monday from the U.S. side; however, from the EU side, at 11:00 GMT, the German WPI for June surged to 1.5% against the expected 0.9% and supported the single currency Euro that further caped loss in EUR/USD. Furthermore, the New York Federal Reserve Bank President John Williams said that the purchases of mortgage-backed securities and Treasury securities from the Federal Reserve both impact interest rates and overall financial conditions. He noted that one group did not have a considerably more impact on the housing market. He added that both of them impact the interest rates; hence, both affect the cost of housing.
He also reiterated that the U.S. economy was still far from the substantial further progress threshold set by the Federal Reserve for easing the asset purchases. He declined to provide a timeline for beginning the process of easing asset purchases and said that Fed would naturally reduce bond-buying and increase interest rates when the time comes. These comments from Williams gave strength to the U.S. dollar, which eventually dragged the currency pair EUR/USD. Furthermore, the risk-off market sentiment driven by the Delta variant of coronavirus concerns also kept the riskier assets like EUR/USD under pressure on Monday.
The Delta variant of the coronavirus has caused an increased number of cases in the U.S., too, with the third day of reporting more than 20,000 daily cases. Researches suggested that the cases were growing rapidly in the areas where the vaccination was lower than 40%. These concerns kept the risk-off market sentiment supported, and hence, EUR/USD dropped on Monday.
EUR/USD Intraday Technical Levels
Support Resistance
1.1835 1.1880
1.1813 1.1903
1.1790 1.1926
Pivot Point: 1.1858
EUR/USD - Technical Outlook
The EUR/USD is trading at 1.1863 level, facing immediate resistance at 1.1879 level that marks a double top pattern. On the hourly timeframe, the EUR/USD pair has formed a symmetrical triangle pattern that’s extending resistance at 1.1879 level along with a support area of 1.1860. Typically, the ascending triangle breakout on the higher side, and if this happens, the EUR/USD price will be exposed to the next resistance level of 1.1908. Likewise, the bearish breakout of 1.1860 exposes the pair towards the next support area of 1.1836. The MACD is holding in a buying zone, but the recent histograms show a weakness in the bullish trend. It looks like the traders are looking for a fundamental reason to trade the market, and the U.S. Inflation figures can be that reason. Let’s keep an eye on the CPI and Core CPI data to determine further trends in the direct currency pair. All the best!
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