EUR/USD re-targets 1.1000 post US-CPIShort(Mid Term : BULLISH
EUR/USD looks to regain some fresh buying interest following CPI-led weakness in the US dollar on Wednesday.
The movement of the euro's value is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regard to their plans for adjusting interest rates.
Moving forward, hawkish ECB-speak continues to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.
Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.
EUR/USD levels to watch
So far, the pair is gaining 0.28% at 1.0989 and faces the next up-barriers at 1.1095 (2023 high April 26) and 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022). On the other hand, the next contention level aligns at 1.0941 (monthly low May 2), followed by 1.0909 (weekly low April 17) and finally 1.0831 (monthly low April 10).
The EUR/USD pair remained under selling pressure throughout the first half of the day, meeting sellers ahead of the 1.1000 figure and hovering at the lower end of its weekly range at 1.0950 ahead of first-tier United States (US) data. The US Dollar retained its latest strength amid a risk-averse environment and, despite Treasury yields, lost momentum.
Eurozone (EU) news passed unnoticed. Germany published the final version of its April inflation figures, confirming the Harmonized Index of Consumer Prices (HICP) rose at an annual pace of 7.2%. The core reading also matched the preliminary estimate at 7.6%.
EUR/USD short-term technical outlook
The EUR/USD pair daily chart shows that further gains remain unclear. The pair remains below a directionless 20 Simple Moving Average (SMA) while the longer ones maintain their mildly bullish slopes far below the current level. Technical indicators, in the meantime, lack directional strength within neutral levels.
In the near term, and according to the 4-hour chart, the technical picture is quite similar. The pair recovered from around a mildly bullish 200 SMA, but a bearish 20 SMA crossing below a directionless 100 SMA provide near-term resistance around 1.1000. Finally, technical indicators turned north but remain within positive levels. If the pair is able to regain and sustain gains above 1.1000, bulls may retake control of the pair.
Support levels: 1.0940 1.0890 1.0830
Resistance levels: 1.1000 1.1050 1.1100
