EUR / USD stabilizes around 1.2070 after a sharp decline

  • EUR / USD is still on track to close the day in negative territory.
  • Annual CPI inflation in the US jumped to 4.2% in April.
  • The US Dollar Index gains more than 0.5% on Wednesday.

The pair EUR/USD it spent the first half of the day moving sideways in a relatively tight range above 1.2100 on Wednesday, but came under heavy pressure during US trading hours. At time of writing, the pair, which hit a daily low of 1.2066, was down 0.58% on the day at 1.2075.

USD Strengthens on Rising Treasury Yields

Highly anticipated inflation data from the US on Wednesday showed that the consumer price index (CPI) in April jumped to 4.2% on an annual basis from 2.6% in March. This reading exceeded the market expectation of 3.6%. Additionally, the core CPI, which excludes volatile food and energy prices, rose to 3% from 1.6%, compared to analysts’ estimate of 2.3%.

Yields on US Treasuries rose after this report and gave the dollar a boost. With the benchmark 10-year US Treasury yield rising more than 3% on the day, the US dollar index is up 0.62% to 90.73.

No macroeconomic data will be released on the European economic agenda on Thursday and the USD market valuation is likely to continue to drive EUR / USD action. In the second half of the day, the US Producer Price Index (PPI) data will be revised to gain new momentum. An equally strong IPP reading is likely to help the USD continue to outperform its rivals. The US Department of Labor will also release its weekly data on initial jobless claims.

Technical levels

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