EURUSD rises above 1.0350 after US PPI.

• The low intensity US Producer Price Index reinforces the arguments of Federal Reserve officials to slow down the pace of tightening.
• Eurozone GDP beat estimates, although it continues to decline in the face of the looming recession.
• EURUSD will extend its losses if it dips below 1.0360 after struggling at the 200 DMA.

The EURUSD It rises in the North American session, although it remains below the daily highs at 1.0481, reached after the publication of a softer than expected Producer Price Index (PPI) for the United States. However, US PPI and CPI reports, which show signs of cooling inflation, together with the Federal Reserve’s decision to set the stage for a slower pace of interest rate hikes, spurred risk appetite. At the time of writing, the EURUSD is trading at 1.0364.

US inflation cools as CPI and PPI decline in October

World stocks continue their recovery, between 0.70% and 2.10%. The US Department of Labor reported that the October PPI rose 8% yoy, down from 8.3%, while excluding volatile items, the so-called core PPI rose 6.7% yoy, down from 7.1%. provided. Now that the CPI and PPI reports are in the rear view mirror, suggesting that US inflation is cooling off, Fed officials are lying to decrease the size of rate hikes. from 75 basis points to 50. Therefore, the US dollar (USD) weakened on the release, as evidenced by EURUSD rallying towards a fresh 5-month high at 1.0481, piercing its way north of the moving average. 200-day EMA at 1.0427, before pulling back at current exchange rates.

Meanwhile, a number of Fed insiders crossed the newswires headlined by Lisa Cook, who said inflation remains too high and the central bank’s focus will be on tackling inflation. Philadelphia Fed President Patrick Harker said he is “not too concerned” about inflation expectations and suggested the Fed could pause while the US central bank remains committed to reining in inflation. .

Elsewhere, the New York Fed’s Empire State Index rose to 4.5, beating expectations for a contraction of 6, though the PPI report eclipsed it.

In the Eurozone, Francois Villeroy, a member of the European Central Bank (ECB), said that the ECB will probably continue to raise rates beyond the 2% level. He added that monetary policy divergence around the world puts downward pressure on the euro and more on the Japanese yen (JPY).

Data-wise, the Eurozone economic calendar included third-quarter GDP, with data showing the bloc growing by 2.1% year-on-year, in line with estimates but below the second-quarter figure. At the same time, the ZEW Economic Sentiment Index for the Eurozone and Germany improved, although it remained negative, as both figures came to -36.7 from -59.7 and -59.2, respectively.

EURUSD Price Analysis: Technical Perspective

Therefore, EURUSD has a neutral-upward bias and briefly pierced the 200-day EMA at 1.0427, but pulled back around the London Fix, dipping below 1.0360. If EURUSD fails to make a daily close above the Nov 11 high at 1.0364, a fall below 1.0300 will worsen. That being said, the next support for the EURUSD would be 1.0200, followed by the 100 day EMA at 1.0026.