The EURUSD is trading marginally lower on the back of mixed consumer inflation data from the US. While the US CPI data met market expectations at 0.2%, the US Core CPI came out less than market expectations at 0.1%, which was less than the 0.2% that analysts had predicted. As a result, the EURUSD is down 33 pips on the day as at the time of writing.
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Technical Outlook for EURUSD
The deviation for the US CPI data (difference between the previous and consensus number) was 0.1%, while that for the US Core CPI was 0.0%. As such, the outcome of this news release was such that the deviation targets that would have made the two consumer inflation data tradable were not met. Furthermore, there was some sort of conflict in the news releases, with the Core CPI turning out lower while the CPI came out as expected. This was also responsible for the muted response seen in the EURUSD.
With attention now turning to the trade events (US-China phase 1 deal), the pair can now lend itself to an analysis of its technical parameters.
The EURUSD has formed a rising wedge on the daily chart. The expectation for this pattern is for price to eventually break below the wedge border, which would be in keeping with the long-term outlook for the pair, which is currently in a downtrend.
At present price levels, the EURUSD is testing the key support within the wedge at 1.11023. There has to be some strong bearish pressure to force down the EURUSD below this support as well as the lower wedge border which lurks closeby for a breakdown of the wedge to occur. If this happens, then we could see the EURUSD testing the 1.1066 support (previous lows of 1 Aug, 19 Aug and 24 Dec 2019). Below this level, further support targets lie at 1.09932, 1. 099412 and Sep 30 lows of 1.08965.
On the flip side, failure to breach the 1.11023 support could see price returning to the wedge’s upper border, contending with 1.11667 as the initial resistance.