- EUR/USD advances after falling US Treasury yields and comments from Chicago Fed President Goolsbee.
- The US PPI indicates the continuation of the disinflationary process.
- The Eurozone avoids a recession in the fourth quarter of 2023; Pay attention to Christine Lagarde's speech.
The EUR/USD pair rises during the North American session and posts gains of 0.08% thanks to the drop in US Treasury yields following Tuesday's US inflation report. Additionally, better-than-expected Eurozone data supported the jump to a daily high of 1.0719. At the time of writing, the pair is trading at 1.0716.
US inflation slows but remains above Fed's 2% target
The US Bureau of Labor Statistics (BLS) revealed that inflation is anchored above the 3% threshold in headline and core inflation. Recently, the Bureau revealed that prices paid by producers – also known as IPP – plummeted to -0.2%, surpassing the drop in November. The core PPI stood at -0.1%, both figures on a monthly basis, suggesting that inflation is indeed cooling.
Additionally, falling US Treasury yields are weighing on the Dollar. The US Dollar Index (DXY), which tracks one currency basket against the other six, fell 0.02% to 104.84.
At the time of writing, Chicago Fed President Austan Goolsbee justified that if inflation rises a little in the coming months, it would be consistent with our (the Fed's) path back to target. Goolsbee insisted on his position of relaxing the policy even if inflation does not reach the 2% threshold in annual figures.
On the other hand, the Gross Domestic Product of the Eurozone remained flat in the fourth quarter, with 0% quarterly, while compared to 2022 it rose 0.1%. Despite this, Germany, the bloc's largest economy, contracted -0.3% quarter-on-quarter.
In the European session, the vice president of the European Central Bank (ECB), Luis De Guindos, commented that the incoming data points to short-term economic weakness, and emphasized that the disinflationary process continues.
What to watch out for?
The December trade balance and Christine Lagarde's speech will be published on the Eurozone agenda. In the United States, retail sales, Industrial Production and initial jobless claims are expected to give direction to the EUR/USD pair.
EUR/USD Price Analysis: Technical Outlook
The pair is biased lower despite the signal that it could be bottoming around the 1.0695-1.0700 area. However, the Relative Strength Index (RSI) signals that the bears are in control, and EUR/USD is trading below the daily moving averages (DMA). That being said, the first major support would be 1.0700, followed by the 1.0694 low from February 14. Once these two levels are broken, the next intermediate support would be the November 10 low at 1.0656. On the other hand, if buyers reclaim the 1.0750 area, they may challenge a resistance trend line passing around the 1.0755/70 area.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
