EUR/USD is consolidating as investors await further cues from the ECB interest rate decision and the US inflation data later in the day. Europe has made significant strides in its economic recovery as its vaccination program progresses and economies reopen. However, the recovery is still incomplete.
On Tuesday, the ZEW Institute stated that the region’s economic sentiment was at 81.3 in June compared to May’s 84.0. On the same day, the GDP preliminary data indicated that the economy had contracted by 0.3% in the year’s first quarter. As such, ECB is expected to maintain an accommodative monetary policy.
At the same time, EUR/USD will be reacting to the US CPI data. Economists expect consumer prices to have risen by 4.7% on a year-on-year basis compared to the prior month’s 4.2%. Besides, the expected core CPI reading of 3.4% is the highest since 1993. While a higher-than-expected figure will boost the US dollar, the gains will be curbed by Fed’s accommodative policy. The initial jobless claims numbers will also impact the currency pair’s price movements.
EURUSD technical forecast
EUR/USD is on a consolidation pattern after dropping to 1.2153 earlier in the day. At the time of writing, it was down by 0.08% at 1.2169. On Wednesday, it hit an intraday high of 1.2218 before pulling back. On a two-hour chart, it is trading below the 25 and 50-day exponential moving averages.
I expect the currency pair to find resistance along the EMAs at 1.2177 ahead of the ECB interest rate decision. Subsequently, it may drop to find support at 1.2150. On the flip side, the bulls may manage to push the price to 1.2200, where it will probably experience resistance.