- Inflation in Germany is confirmed at 10.4% in October.
- European Commission sees further slowdown for 2023.
- EURUSD remains bullish despite overbought.
EURUSD continues to take advantage of dollar weakness and climbed to 1.0279, the highest level since August 12. The pair remains in the high zone with the weakness of the dollar as the main support.
Follow the post-IPC rally
The EURUSD rally or the crash of the dollar began on Thursday after the US inflation report. The Consumer Price Index climbed 7.7% (YoY) in October, down from 8.2% in September and below the 8% market consensus.
Lower US inflation data may lead to less aggressive Federal Reserve interest rate hikes. This change in outlook keeps thinking about the dollar.
The European Comission presented its quarterly report on Friday where it estimates that the Eurozone will grow 3.2% in 2022 and 0.3% in 2023. They see a contraction in the last quarter of this year and in the first of next year. In Germany, a record 10.4% annual inflation was confirmed in October, which did not generate surprise since it equaled the preliminary reading.
Radar shows 1.0300
EURUSD rallies face above 1.0270 to the resistance of 1.0290, which is the last defense for a return above 1.0300. Then the next level to watch is 1.0360.
In the opposite direction, at 1.0220 is the first major support, followed by 1.0160 and then 1.0095/1.1000. A fall below this last zone would leave the euro weakened, favoring an extension of the decline.
Technical levels
Source: Fx Street
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