EURUSD rose by 0.14% to trade at 1.0631 in the Asian session on Wednesday. The pair is propelled by weak US housing market data, whose impact seem to have overridden hawkish comments by Federal Reserve Chair, Jerome Powell. After five consecutive sessions of losses, the euro has an opportunity to make some gains in the absence of high-impact US economic data.
The EURUSD exchange rate has declined by 2.06% since the release of US CPI data on April 10. Furthermore, the pair currently trades near November 2023 lows, underpinning the massive mountain the euro has to climb to recover.
The dollar’s strength is propelled by a high inflation rate, which has solidified the view that the Fed won’t cut interest rates in June. US CPI rose to 3.5% YoY in March, frustrating the Fed’s efforts of bringing it down to 2.0%. In his speech at the Wilson Center’s Washington Forum on Wednesday, Fed Chairman Jerome Powell stated that recent data has not given the bank enough confidence to consider a rate cut in June.
Meanwhile, the Eurozone has been making significant progress in tackling inflation, with successive declines in January and February. The March figures are due for release on Wednesday, and they will inject new volatility into the EURUSD rate. Meanwhile, the US dollar will continue to be under pressure following lower-than-expected housing market data on Tuesday. Housing starts declined by 14.7% MoM in March, more than the forecast -2.4%. In addition, the number of building permits issues declined from 1.523 million to 1.458 million, falling short of the forecast 1.514 million.
Technical analysis
EURUSD pivots at 1.0624, with the RSI showing that the buyers are currently in control. The upside will likely encounter resistance at 1.0637. However, if the buyers keep the price above the pivot, they will likely break the resistance, with the resulting momentum potentially moving the pair to test 1.0647. However, a move below the pivot mark will favour control by the sellers, with support coming at 1.0616. A continuation of control by the sellers will likely break the support, setting the stage to test 1.0606.
