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Euro Latest: EUR/USD Falling to Key Support, Euro Area Inflation Dips

Euro Latest: EUR/USD Falling to Key Support, Euro Area Inflation Dips

Justin McQueen, Strategist

EUR/USD Price Analysis & News

  • Euro Area Dip, However, H2 Boost is Expected
  • EUR/USD To Take Cue From Key US Data

Euro Area Inflation Dips, However, H2 2021 Boost Is Expected

Euro Area inflation fell to 1.9% in June, from 2.0% in the prior month, matching analyst forecasts. Meanwhile, the core reading remained at 0.9%, printing in line with estimates. The rise in core inflation stemmed from a 0.5ppt increase in core goods inflation to 1.2%, while services fell 0.4ppts to 0.7% from the prior month. Euro little changed following the data.

Despite the slight dip, however, inflation will likely remain volatile throughout the rest of the year with the ECB continuing to expect base effects to boost inflation, hitting a peak of 2.6% in Q4 before a decline to 1.5% in 2022. That being said, the inflation data is unlikely to prompt the ECB doves to shift away from the view that monetary policy needs to remain very accommodative. As such, with Fed officials starting to blink over the spike in inflation, downside risks are likely to persist for EUR/USD.

Euro Latest: EUR/USD Falling to Key Support, Euro Area Inflation Dips

Source: Refinitiv

The CPI and Forex: How CPI Data Affects Currency Prices

EUR/USD Price Action Awaits Key US Data

Despite increased talk that month-end models point to USD selling into the London fix, price action has been far from encouraging for the Euro. As the 1.1900 handle now gives, risks are for a move towards key support at 1.1840-50, which coincides with the uptrend from the YTD low and the June lows. The main focus for FX markets will be the upcoming tier 1 US data, namely Friday’s NFP report.

Pivot

S1

S2

S3

R1

R2

R3

1.1901

1.1870

1.1846

1.1815

1.1925

1.1956

1.1986

Trading with Pivot Points

EUR/USD Chart: Daily Time Frame

Euro Latest: EUR/USD Falling to Key Support, Euro Area Inflation Dips

Source: Refinitiv

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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