EUR/USD Price Analysis – Aug 11, 2023

Daily Price Outlook

The EUR/USD currency pair continues to extend its upward rally, maintaining its position above the 1.1000 mark as we head into Friday. This pair has now exhibited positive trading performance for a consecutive three-day period. However, the reason behind this upward momentum can be attributed to a variety of factors such as the weakening of the US dollar and significant data releases from Europe.

Looking ahead, a number of traders are adopting a cautious approach, opting to observe market developments rather than actively engage. This catious feeling is strong because the upcoming US Producer Price Index (PPI) report is expected to be released later in the American trading session. However, the outcome of this report is anticipated and is anticipated to have a meaningful impact on market dynamics, thereby influencing the trading strategies of many market participants.

ECB Report and Inflation Uncertainty: Potential Impact on EUR/USD Pair

The European Central Bank's (ECB) recent report highlighted that inflation in the Eurozone is expected to remain high for an extended period, and the outlook for economic growth and inflation is uncertain. A Reuters poll suggests that the 2.0% inflation target might not be achieved until 2025, with over 90% of surveyed economists not expecting any interest rate cuts before the second quarter of 2024.

This news could weigh on the EUR/USD pair, as high inflation and economic uncertainty might impact the euro's strength.

US Economic Data's Dual Impact on EUR/USD Pair

According to the latest data, the Consumer Price Index (CPI) in the US experienced a year-on-year increase of 3.2% in comparison to June's 3%, which was just slightly below the anticipated 3.3%. In the meantime, the Core CPI showed a slight decrease, moving from 4.8% to 4.7%. Furthermore, there was an unexpected rise in Initial Jobless Claims, reaching 248,000, surpassing the earlier forecast of 230,000.

Therefore, the impact of this news on the EUR/USD pair could be two sided. The stronger-than-expected CPI and Core CPI figures may bolster the US Dollar, driven by possible expectations of stricter monetary policy and increased investor attraction. On the other side, the surge in Initial Jobless Claims could indicate economic difficulties, potentially offsetting the Dollar's strength. As a result, the EUR/USD pair could experience a mix of influences, potentially leading to increased volatility or a complex trading pattern.

EUR/USD - Technical analysis

The EUR/USD pair is exhibiting notable upward momentum as it tests the pivotal resistance level at 1.1030. This prompts a cautious approach in the upcoming trading sessions, emphasizing the importance of the price remaining below this level to sustain the current bearish trend. The associated targets within this bearish trajectory lie at 1.0955 and extend further to 1.0880, contingent on the successful breach of the aforementioned resistance level.

Conversely, it's crucial to acknowledge that a breach of 1.1030, followed by a sustained position above it, would halt the negative scenario and potentially reignite an attempt to reestablish the primary bullish trend. In terms of today's expected market dynamics, the projected trading range spans from the support level of 1.0900 to the resistance level of 1.1030.

Overall, the prevailing trend for today is anticipated to be bearish.