– US Dollar moved sideways after US inflation numbers.
– ECB members continue to talk about rate hikes.
– EUR/USD is likely to consolidate between 1.0940 and 1.1000.
The US Dollar stumbled after US inflation data but then recovered ground, sending the EUR/USD back under 1.1000.The pair is moving sideways, without a clear direction supported by a weaker US Dollar and again, unable to benefit from hawkish comments from
European Central Bank (ECB) members.
ECB Governing Council member
Mario Centeno said on Wednesday that the policy will remain tight for some more time but mentioned that interest rates should start to come down at some point during 2024.Bloomberg reported that some ECB members are saying that a rate hike in September may be needed.Such a scenario assumes rate hikes in June and July.
The final reading of German inflation confirmed the preliminary numbers with the annual rate rising 7.2% in April.No euro area data is scheduled for release on Thursday, however, the Bank of England (BoE) decision could have an impact on Euro’s crosses.
In the US, the Consumer Price Index (CPI) ticked lower to 4.9% in April from 5% in March, while the Core CPI dropped to 5.5% from 5.6% in March.After the report, the US Dollar suffered heavy losses but then rebounded and turned positive.US yields dropped significantly as market participants price in a pause in June from the Federal Reserve.
On Thursday, the US will release more inflation data with the Producer Price Index (PPI).
US Inflation Quick Analysis: Fed feels more comfortable as inflation recedes, US Dollar set to slip
EUR/USD short-term technical outlook
The EUR/USD pair rose modestly on Wednesday, staying below the 20-day Simple Moving Average (SMA) and holding above the 1.0940 support area.The mentioned average is flattening and while below, the odds of a deeper bearish correction may rise.
On the 4-hour chart, the technical indicators offer mixed signals, with the Relative Strength Index (RSI) moving to the upside, however, below 50; Momentum is flat.The pair is likely to consolidate further between a downtrend line, currently at 1.1010 and above the 1.0940 support area.
If the Euro rises above 1.1010 it would likely trigger more gains toward 1.1040 initially.Then comes the 1.1100 mark that is crucial.
On the flip side, below 1.0940, more weakness seems likely, exposing the 1.0920 and the 1.0900 zone.
View Live Chart for the EUR/USD
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