EUR/USD Clings To 1.0200 Ahead of U.S. CPI
Alex Boltyan | Aug 09, 2022 02:46PM ET
The EUR/USD pair posts its second consecutive day with gains as the dollar remains soft ahead of Wednesday’s CPI figures. At the time of writing, the EUR/USD pair is trading 1.0210, 0.15% above its opening price, after reaching a daily high of 1.0247.
The markets remain cautious as U.S. inflation data will set the pace for the September Fed meeting. The CPI inflation is expected to ease to 8.6% in July from 9.1% in June, although the core inflation is foreseen at 6.1% from 5.9% the previous month.
The swap markets are pricing higher odds for another 75 bps rate hike, and they currently stand at 69.5%, which would take the rate to 3.75% by year-end. However, the U.S. Dollar Index, DXY, remains weak, having slipped below the 106.00 mark.
On the other hand, the Germany 10-Year Bund yields are giving traction to the euro, as they are up nearly 4%, trading at around 0.925%. The spread with the United States 10-Year yield is down for a second straight day, currently standing at 1.86%.
From a technical perspective, the EUR/USD holds a neutral short-term outlook, according to indicators on the daily chart. The RSI slope is turning higher and testing its midline, while the MACD printed a higher green bar indicating that the bullish momentum has gained some steam.
Still, the broader picture remains tilted to the downside, as the price continues to develop in a descending channel drawn from February highs.
The immediate support level is seen at the 20-day SMA, currently standing at 1.0179, followed by the 1.0100 area, where several lows were printed in late July. On the other hand, short-term resistance is seen at the 1.0250 area. A break past this level could pave the way for a test of 1.0300 and 1.0350.
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