The Greenback slipped to a two-month low after the EURUSD currency pair closed a fourth consecutive day in positive territory, with a week-to-date gain of 56 basis points. 

Germany’s inflation advanced month-on-month in June from 6.1% to 6.4% and bolstered the Euro as another rate hike in July is practically warranted. The European Central Bank has been fixated on lowering inflation and, in speeches made last month, hinted that another hike could be expected in July. The market is pricing in a 92.4% chance of the Federal Reserve hiking interest rate in July, with less certainty going forward. The release of the U.S. inflation later today will likely provide some guidance on whether further hikes could be expected.   

Technische Analyse 

The EURUSD currency pair has recently found strength after breaking above a descending triangle pattern and the 100-day moving average to commence an uptrend. The pair has left its 100-day moving average and support at the 1.08392 level in the dust as it breaks through previous highs.  

The breakout above resistance at the 1.10122 level now establishes a support level, while the 1.10935 forms the next resistance level. Bulls could be in contention to take the index within the 1.10935 level if bullish momentum fails to fizzle out. In contrast, a slowdown in upside momentum could open up the possibility of a reversal, given that the Relative Strength Index conditions point to overbought levels. Bears will likely earmark the 1.10122 level as a point of interest to the downside.  

Zusammenfassung 

U.S. inflation is expected to taper off from 4% to 3.1%, while core inflation sheds 30 basis points, potentially signalling that the Federal Reserve’s interest rate hikes are taking effect. If U.S. inflation cools, the Euro could be bolstered by the pricing in of more rate hikes by the ECB beyond that of the Federal Reserve’s. The 1.10935 level is, therefore, a probable destination in the short to medium term.  

Quellen: Reuters, TradingView