- The dollar falls on all fronts after the inflation report.
- EUR/USD recovers intraday momentum, still with dominant downward pressure.
- Inflation in the US in March reaches the highest since 1981.
EUR/USD jumped from a two-day low near 1.0850 towards 1.0900 fueled by a broad decline in the dollar following US inflation data. EUR/USD climbed to 1.0903, marking a new high for the day.
The dollar weakened across the board and turned negative after inflation figures and a sharp drop in Treasury yields.
The US consumer price index in March rose 1.2% in line with expectations and the annual rate went from 7.9% to 8.5%, the highest level since December 1981.
The 10-year rate on the Treasury bond went from a maximum in years to 2.71% and the 30-year rate fell to 2.77%. This sharp decline boosted metals and weakened the dollar.
Although the data was in line with expectations, it may have been followed by a “buy on the rumor, sell on the news” behavior in the market.
EUR/USD is trading around 1.0890 prior to the US open, supported by dollar weakness. DXY is down 0.12%, snapping a streak of eight straight daily gains.
If the advance is extended, the resistance to break the EUR/USD is at 1.0935/40, which contained the advances in the last days. Above, the euro could gain momentum, targeting 1.0960 first. In the opposite direction, a pullback below 1.0870 (20-hour moving average) could further weaken the common currency, exposing critical support at 1.0850.
Technical levels
Source: Fx Street
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