Euro Exchange Rate Moves Higher After US CPI Release

Euro Exchange Rate Moves Higher After US CPI Release

The EUR/USD pair surged above 1.10 as US inflation data came in line with expectations. The core Consumer Price Index (CPI), which excludes food and fuel, increased by 4.7% over the prior year, a bit lower than the previous month. While headline inflation ticked up to 3.2% annually, the markets seem to be betting that interest rates will likely remain unchanged this year. This data marked a good session for forecasters but presented challenges for Dollar bulls.

Euro Rises Above 1.10 Following the US Inflation Release

EUR/USD gained momentum, breaking above its recent trading range after July’s US inflation data was unveiled. Despite the slight uptick in headline inflation to 3.2%, the core CPI’s deceleration trend persists. Key factors driving the increase were housing, food, and automobile insurance costs. The outcome prompted optimism that interest rates might not experience further hikes this year.

US Inflation Data Impacts EUR/USD

US Consumer Price Index (CPI) data for July showed an annualized rise of 3.2%, surpassing June’s 3% growth. However, the core measure, which omits volatile elements, increased by 4.7%, slightly below June’s figure. The dollar weakened, and the EUR/USD pair surged above $1.10 as the market speculated that US borrowing costs might not significantly rise in this cycle due to controlled inflation.

US Inflation and Rate Speculation Drive EUR/USD Movement

EUR/USD broke above the $1.10 level after July’s Consumer Price Index (CPI) data release. While the annualized inflation rate reached 3.2%, core inflation increased by 4.7%, slightly lower than the previous month. This data prompted market participants to consider that interest rates might remain steady for the remainder of the year, leading to the Euro’s gains against the US Dollar.

EUR/USD Technical Analysis and Forecast

The EUR/USD pair has been trading within a range since late July, hovering between 1.0909 and 1.1041. Although Thursday’s trade saw the pair briefly breach this range, a clear breakout has yet to be confirmed. For Euro bulls to gain a conviction, the pair would need to surpass the peak of 1.1103 seen on July 6. The Euro’s long-term uptrend, established since last September, may continue once the current consolidation phase concludes.

EUR/USD Holds Steady After Inflation Data

EUR/USD remains steady around the 1.1000 level following an increase to 1.1060 on Thursday. Although the pair reached a two-week high, its bullish momentum was short-lived, and it closed the day slightly below 1.1000. The US inflation report led to a brief USD sell-off, pushing EUR/USD higher. However, the cautious market sentiment prevented sustained gains, with Euro Stoxx Index down over 1%. The US economic calendar features Producer Price Index and Consumer Confidence Index data.

EUR/USD Forecast: Resistance at 1.1020

EUR/USD trades near 1.1000, having briefly exceeded 1.1060 on Thursday. The pair failed to maintain its bullish momentum, closing just below 1.1000. The upcoming US economic data, including the Producer Price Index and Consumer Confidence Index, may influence the USD. A confirmed break above the 1.1020 resistance level could attract more bullish sentiment for EUR/USD. However, the Euro’s short-term support remains at 1.0912 and 1.07329.