The recent release of the CPI (Consumer Price Index) yesterday, showed an increase of 0.5% on all items, which was in line with market expectations. The CPI is a critical indicator of inflation, which can impact the value of a currency. Inflation tends to reduce the purchasing power of a currency and can lead to a decline in its value, all things being equal. Therefore, this increase in inflation may be perceived as negative for the USD and could lead to a upward pressure on the EURUSD currency pair. (supporting bullish scenario for EURUSD)
However, the DXY (US Dollar Index) seem to be gaining strength recently, and this could weigh on the EURUSD pair. A stronger US Dollar can make it more expensive for investors to hold non-US assets, including the Euro, and can lead to a decline in the EURUSD exchange rate. (Supporting a decline in EURUSD)
What then is the balance?
Looking at the technical analysis of the EURUSD currency pair, we can see that the price is currently hovering around 1.07293, which is near the top of the recent trading range. The 4hr Market zone around 1.06692 is a key support level, which has held several times in the past. If the price breaks below this level, it could trigger a downward momentum and lead to further declines. So, I expect EURUSD to drop to the 4hr Market zone around 1.06690 in the short term
However, the DXY (US Dollar Index) seem to be gaining strength recently, and this could weigh on the EURUSD pair. A stronger US Dollar can make it more expensive for investors to hold non-US assets, including the Euro, and can lead to a decline in the EURUSD exchange rate. (Supporting a decline in EURUSD)
What then is the balance?
Looking at the technical analysis of the EURUSD currency pair, we can see that the price is currently hovering around 1.07293, which is near the top of the recent trading range. The 4hr Market zone around 1.06692 is a key support level, which has held several times in the past. If the price breaks below this level, it could trigger a downward momentum and lead to further declines. So, I expect EURUSD to drop to the 4hr Market zone around 1.06690 in the short term