EUR/USD is trading higher as a reaction to CPI data from various European countries. Earlier on, Germany’s CPI came in at 2.5% YoY compared to April’s 2.0%. At the same time, consumer prices in France and Italy rose by 1.4% and 1.3% in May compared to the prior month’s 1.2% and 1.1% respectively.
These countries, which were some of the most affected European regions by the coronavirus pandemic, have eased lockdown restrictions as cases of the disease decline. The subsequent rise in consumption has resulted in higher consumer prices, which is bullish for the Euro.
EUR/USD will also be reacting to the US retail sales data later in the day. Besides, investors have their eyes on the Fed interest rate decision scheduled for Wednesday. The focus is on whether the US central bank will maintain that the ongoing price pressures are transitory. A dovish tone is likely to be bullish for the currency pair.
EURUSD technical outlook
EUR/USD is up by 0.17% at 1.2140. Earlier in the day, it hit an intraday low of 1.2113. On a two-hour chart, it has moved past the previously formed bearish pennant. Besides, it is trading along the 50-day EMA and above the 25-day EMA. While the pair is likely to rise in the near term, one cannot ignore the possibility of a decline.
I expect the currency pair to find resistance at 1.2150. However, it may then drop to 1.2125 before the bears retest the lower level of 1.2100. Notably, a move above 1.2150 will invalidate this thesis.
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