- Summary:
- The EURUSD trading pair maintained its upturn on Thursday, propelled by weak dollar fundamentals as the market waited for US inflation data.
EURUSD rose to a monthly high on Thursday, trading at 1.0847 after rising by 0.1 percent in the intraday session. The pair has leveraged the bearish sentiment around the US dollar to rise by 1.3 percent in July, reflecting the performance of other major currencies against the greenback in recent days. The DXY Index has declined to near four-week lows of 104.82 as of this writing.
Fed Chairman Jerome Powell’s Congressional Testimony on Tuesday turned out to be a non-event for forex markets, as he stayed guarded on the possibility of rate cuts in September. Instead, he stated that the focus remains on ensuring that the inflation rate is sustainably directed toward the 2 percent target.
The June US CPI figures will be out later on Thursday and will broaden the perspective on a potential rate cut this quarter. The headline inflation is expected to decline by 0.2 percent to 3.1 percent year-over-year, while the Core CPI is forecast to remain unchanged at 3.4 percent. Also, the US Initial Jobless Claims will be out, and will provide insight into the US labour market. US unemployment rate rose unexpectedly to 4.1 percent in June-the highest in two years, exerting pressure on the dollar and raising prospects of rate cuts.
Meanwhile, EURUSD has support from the German CPI data, which came in at 0.1 percent in June to match the forecast figures. Similarly, the German Harmonised Index of Consumer Prices (HICP) inflation stood at 2.5 percent, meeting economists’ forecasts.
Technical analysis
EURUSD looks to continue the upside if the pair stays above the pivot mark at 1.0841. The first resistance will likely come at 1.0847, but extended control by the buyers could breach that mark to send the pair to 1.0852. On the other hand, if the pair moves below 1.0841, the first support could come at 1.0836, below which the upside narrative will be invalid. Furthermore, the resulting momentum could send the pair to test 1.0832.
