- Despite the gloomy market mood, EUR/USD rises in a choppy session.
- Inflation data from the United States, Germany and Italy are due on Wednesday.
- EUR/USD Price Analysis: Ranged, but US economic data could rock the boat.
The shared currency advanced during the American session, taking advantage of the weakness of the US dollar, which is falling despite US bond yields rising, ahead of the release of US July inflation figures. Coupled with the above, risk aversion keeps safe-haven pairs in the driver’s seat, with the exception of the USD against the Euro.
EUR/USD cannot take advantage of the general weakness of the USD
EUR/USD is trading at 1.0216, above its opening price but below its daily high, reached during the day at 1.0247. However, buyers were unable to maintain strength or took profits on the coming US economic data.
US equities are trading with minimal losses. A light US calendar has investors reassessing last week’s jobs report, in which US non-farm payrolls beat expectations, rising by 528,000. However, traders’ attention has shifted to the consumer price index (CPI). Headline inflation estimates stand at 8.7% yoy, down from 9% in June, while core CPI, which excludes food and energy, is expected to rise 6.1% yoy, down from 6.2% in June. last month’s reading.
On the other hand, headlines that Russia has stopped pumping oil through the Druzbha pipeline since Thursday added to an already negative mood, weighing on EUR/USD. The Russian oil company Transneft blamed the payment problems on UkrTransNafta, the operator on the Ukrainian side.
What to watch out for
The EU economic calendar will include inflation figures from Germany and Italy. On the US docket, the US consumer price index (CPI), core CPI, and Fed comments following the release of inflation data will provide further guidance on the path of tightening of the Fed
EUR/USD Technical Outlook
From a daily chart perspective, the EUR/USD has a neutral bias. It has been trading above the 20-day EMA since July 28, which has been strong support, with sellers unable to decisively break the moving average (MA). On the other hand, the buying pressure on the EUR/USD remains limited as the major currency trades in the 1.0096-1.0293 range for at least 21 days.
However, with US data in the offing, investors should expect some volatility in the Wednesday session. The breakout of the top of the range will expose resistance levels at 1.0300, followed by the 50 day EMA at 1.0350 and 1.0400. On the other hand, the first support of the EUR/USD would be 1.0200. Once broken, the next support would be the 3rd Aug low at 1.0122, followed by the 27th Jul low at 1.0096.
Source: Fx Street
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