The Federal Reserve and European Central Bank have adopted a combative approach to rising inflation. Interest rate hikes are the name of the game, and the EURUSD currency pair is being dragged lower as a result.  

Bets on a continuous US rate hike cycle are firmly in place, following reports which support the narrative. US producer inflation and consumer spending came at levels concerning the Federal Reserve, prompting a response.  

Technical 

A downtrend has plagued the EURUSD, with support and resistance now established at the 1.06159 and 1.07233 levels, respectively.  

Following a bounce from support, bullish traders will look to the 1.07233 level with interest. A breakout above the level on high volumes could affirm a bullish case, with the 1.07904 level probable.  

If bears sweep into the market, price is likely to reject resistance, with the 1.06159 level a probable point of interest.  

Summary 

The EURUSD will likely experience less resistance to the downside as higher US rates promote buying into safe-haven assets (US Dollar cash or Bonds) during inflationary periods. The 1.07233 level is pivotal as it will define the true sentiment of the market if a rejection or breakout occurs.  

Sources: CME, Reuters, TradingView