EUR/USD Analysis – November 11, 2021

US CPI Triggers a Sell-off in Euro

The EUR/USD pair closed at $1.1478 after hitting a high of $1.1596 and a low of $1.1475. On Wednesday, the EUR/USD reversed course and fell precipitously to a more than one-year low below $1.1500. The selling pressure across the riskier currency pair EUR/USD was triggered by the rising price of the US dollar amid the stronger than expected CPI report. The US Dollar Index was high across the board on Wednesday as it reached its highest since last July at 94.90, which ultimately added heavy selling pressure on the EUR/USD currency pair. Furthermore, US Treasury yields on the benchmark 10-year note rose to 1.59%, adding to the greenback's strength and dragging the EUR/USD pair lower.

On the data front, at 12:00 GMT, the German Final CPI in October remained flat, with expectations of 0.5%. At 14:00 GMT, Italian industrial production increased by 0.1% versus the expected 0.1%, bolstering the single currency Euro and limiting further losses in the EUR/USD pair. From the US side, at 18:30 GMT, the CPI in October surged to 0.9%, against the predicted 0.6%, and supported the US dollar, which ultimately added to the further loss in the EUR/USD pair.

The core CPI increased to 0.6%, versus the expected 0.4%, supporting the US dollar and putting further pressure on the EUR/USD pair. Last week's unemployment claims surged to 267K from an estimated 257K, weighing on the US dollar, which succumbed to further losses in EUR/USD. At 20:00 GMT, the final wholesale inventories also increased to 1.4%, against an estimated 1.1%, and weighed on the US dollar, which limited the downward momentum in the EUR/USD pair.

US inflation hit a 30-year high on Wednesday and reached 0.9% in October after rising for the 12th consecutive month, which ultimately added strength to the US dollar. On the one hand, rising inflation fears were pushing the US dollar higher, but on the other hand, it was also at alarmingly high levels, which raised fears in the market that it could be persistent and remain longer than expected. These fears raised risk-off market sentiment in the market, which weighed further on the already declining prices of the EUR/USD currency pair.

Meanwhile, European coronavirus cases reached record highs as outbreaks surged in many countries across Europe due to resumed trade and tourism. The World Health Organization has warned that a jump of more than 50% in new coronavirus cases over the last month has been seen in Europe, and the continent could see another half-a-million deaths by February. The WHO has said that Europe is again under siege by COVID-19 as vaccination uptake has plateaued in some parts of Europe. On Wednesday, the rising coronavirus infections in Eastern Europe put additional pressure on the single currency, the euro, and added extra downside momentum to the EUR/USD currency pair.

EUR/USD Intraday Technical Levels

Support Resistance

1.1438 1.1559

1.1396 1.1638

1.1317 1.1679

Pivot Point: 1.1517

EUR/USD - Technical Outlook

On Thursday, the EUR/USD's technical side supported a bearish bias below the 1.1516 pivot point level. The EUR/USD has closed a "Three Black Crows" candlestick pattern that supports a selling trend. However, the pair is gaining immediate support at yesterday’s low level of 1.1475.

The violation of the 1.1475 support level exposes the EUR/USD towards 1.1437, 1.1397, and 1.1318 support levels. Alternatively, the resistance stays at the 1.1516 level and a bullish crossover of this exposes the Euro price towards the 1.1557 and 1.1635 levels.

The MACD and RSI support a selling trend, but they have entered the oversold zone now. Typically, the market experiences profit-taking, which results in a bullish rebound. The EUR/USD’s bearish bias dominates below 1.1516 and vice versa. All the best!