EUR/USD refreshes session tops near mid-1.1400s post dismal US data
The EUR/USD pair built on early gains and surged to fresh session tops, in the region of mid-1.1400s following the release of US economic data.
The pair caught some fresh bids after data released from the US showed headline CPI was unchanged on a monthly basis, while annual headline inflation ticked further below the Fed's 2.0% medium-term target, to 1.6% from May's 1.9%. Meanwhile, core CPI (excluding food and energy prices) recorded a tepid growth of 0.2% and the yearly rate held steady at 1.7%.
Adding to the disappointing inflation figures, the US monthly retail sales failed to rebound from a 0.3% decline in May, the weakest outcome since January 2016, and contracted further by 0.1% in June, with sales excluding automobiles also contracting by 0.2% on a monthly basis.
Today’s downbeat readings might have dashed hopes for any additional Fed rate hike action by the end of this year. The same is evident from plunging US Treasury bond yields, which is eventually weighing on the US Dollar and driving the major higher.
Against the backdrop of recent ECB “taper tantrum”, which continues to lend support to the shared currency, a fresh leg of up-move back towards the key 1.15 psychological mark now seems a distinct possibility.
Valeria Bednarik, Chief Analyst at FXStreet writes, "the 4 hours chart shows that the price has been unable to recover ground above a bullish 20 SMA, currently acting as an immediate resistance at 1.1425, while the RSI indicator aims higher around 51, but the Momentum indicator turned modestly lower within bearish territory, indicating that bulls are side-lined at the time being. An upward acceleration through the mentioned 1.1425 level could see the pair advancing up to 1.1460, while beyond this last, 1.1490 and 1.1525 are the next short-term resistances and bullish targets."
"Below 1.1380 on the other hand, the pair could slide down to 1.1340, while once this last gives up, 1.1290, June 28th low comes next" she added.
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