The U.S. will release its Inflation and CPI readings for April today, with expectations leaning towards a higher month-on-month inflation reading and sticky core inflation. Traders will be on tenterhooks as they try to discern whether the Federal Reserve has more to do in fighting inflation with rate hikes or if a recession is potentially around the corner.

Across the Atlantic, Europe’s economic giant, Germany, reported a CPI of 116.6, in line with expectations, potentially uplifting expectations of a 25 basis point rate hike by the European Central Bank over a jumbo-sized 50 basis point as inflation remains glued to the European economy.

Technical

The EURUSD currency pair traders have preserved the pair’s uptrend with the price respecting and trading above the 100-day moving average. Support and resistance are located at the 1.09094 and 1.10935 levels, respectively.

Following a rejection of resistance in the prior week, the pair has found support on its 100-day moving average. A reversal from the dynamic support level could play out if bullish traders enter the market, supported by weaker U.S. inflation data. The 1.10935 level will likely be a psychological point of interest in a bull case.

Alternatively, if bearish traders feel empowered, more likely by upbeat developments in U.S. Inflation, the 1.09094 level will likely be within bearish reach if a breakdown below the 100-day moving average on high volumes ensues.

Summary

A ticking time bomb has recently plagued the U.S. markets with the debt ceiling approaching. The largest economy in the world could default on its obligations if the ceiling is not raised. Along with inflation data, traders will closely monitor developments in the debt ceiling crisis, as a default could weigh on the U.S. markets overall. The 1.09094 and 1.10935 levels are vital in determining the market’s sentiment on the EURUSD currency pair.

Sources: Reuters, TradingView