EURUSD Technical Analysis – Focus on the US inflation data

Fundamental
Overview

The USD got a short term
boost recently as Trump floated reciprocal tariffs. That came after a good US NFP report where the data was mixed at best but
still pointing to strength. The jump in average hourly earnings caught the eye
but that might have been distorted by the drop in average weekly hours.

We’ve also got another jump
in inflation expectations in the University of Michigan Consumer
Sentiment survey
showing that the tariffs news is the main culprit of the recent surge in
expectations.

The focus now switched to
the US CPI report due later today where Core inflation is expected to tick
lower which would be a welcome news. A lower than expected print should see the
US Dollar losing ground across the board once again, while a hot reading might
boost the greenback for the rest of the week.

On the EUR side, the ECB
recently cut interest rates by 25 bps as expected and overall
we didn’t get anything new from the event as the central bank remains data
dependent regarding the pace and magnitude of cuts. The latest PMIs showed an encouraging rebound in activity and
the news of a peace deal in the Russia-Ukraine war continue to gather momentum.
That should be positive for the economy all else being equal.

EURUSD Technical
Analysis – Daily Timeframe

On the daily chart, we can
see that the EURUSD price action continues to be mostly rangebound. The price
is now trading between the 1.0344 support and the 1.0447 resistance. The buyers will
look for a break higher to extend the rally into the 1.06 handle, while the
sellers will look for a break lower to target the 1.0222 level next.

EURUSD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the recent price action and the trading between the key
levels. There’s not much we can add here as buyers and sellers will lean onto
those key levels or look for breakouts.

EURUSD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have some consolidation just above the key 1.0344 level. From a
risk management perspective, it would be much better to wait for the US CPI
report as any technical setup can be invalidated in a blink of an eye when the
data gets released. The red lines define the average daily range for today.

Upcoming
Catalysts

Today we have the US CPI report. Tomorrow,
we get the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the US Retail Sales data.

This article was written by Giuseppe Dellamotta at www.forexlive.com.