Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1150.
- Add a stop-loss at 1.0950.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0950.
- Add a stop-loss at 1.1240.
The EUR/USD price continued soaring after the relatively encouraging US consumer price index (CPI) data. The pair soared to a high of 1.1135, the highest level since March 2022 as the US dollar index dropped to $100.
US inflation is still falling
The price of most products and services in the United States is dropping, bringing a sigh of relief to most policymakers in Washington. Data published by the Bureau of Labor Statistics (BLS) showed that America’s inflation fell to 3.0% in June, the lowest point since March 2022.
Excluding the volatile food and energy prices, inflation dropped to 4.8%. While this figure is still above the 2% Fed target, moving below the psychological level of 5% is a welcome move.
There are signs that inflation will continue falling in the coming months. For example, data shows that ocean shipping cost has dropped to the lowest level since 2019. This is a sign that demand is easing internationally.
At the same time, Chinese data revealed that inflation came in at 0% in June, meaning it is about to move into a deflation. This is important since the US imports goods worth billions of dollars monthly from China.
The US inflation numbers came a few days after the US published mild jobs numbers. According to the BLS, the economy added 209k jobs in June. It also downgraded the previous two job estimates.
Therefore, the EUR/USD pair rose as investors changed their estimates of interest rates. The view is that the Fed will hike rates by 0.25% this month and then take an indefinite pause.
Looking ahead, the key movers for the pair on Thursday will be the latest US producer price index (PPI) data. France will also deliver its inflation report while the European Commission will publish the economic forecast report.
EUR/USD technical analysis
The EUR/USD pair made an important move on Wednesday when it moved above the key resistance level at 1.1090, the highest point in April. This price was also the upper side of the ascending triangle pattern.
The pair has moved above the 50-day moving average on the daily chart. Also, the MACD has continued rising and is slightly above the neutral point. Therefore, the outlook of the pair is still bullish, with the next level to watch being at 1.1150.
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