The euro was down sharply on Thursday on lower eurozone bond yields as financial markets continued to focus on growth risks.
The fastest rate-hike cycle in decades to fight soaring inflation has hit consumer demand, raising investor fears of slowing growth or an outright recession, according to Reuters.
At 12:09 GMT, EUR/USD is trading at 1.0392, down 0.0050 or -0.48%. On Wednesday, the Invesco CurrencyShares Euro Trust (FXE) ETF settled at $96.58, down $0.78 or -0.80%.
Consumer inflation in France hits record high
Data from France showed June annual inflation was slightly higher than expected at a record 6.5% ahead of a eurozone-wide print on Friday, the last the ECB will consider ahead of its meeting. July 21 policy, where it is expected to raise rates by 0.25%.
US inflation report at your fingertips
The Core Personal Consumption Expenditures Price Index – the Fed’s preferred inflation indicator – will be released at 12:30 GMT.
The basic personal consumption expenditure price index should post a monthly gain of 0.4%. A decline will be an early indication that inflation may be peaking. This could trigger an intraday resumption of hedging short positions in the euro, as it could mean the Fed won’t have to be as aggressive for a long time. That’s overkill, however, because it will take much more than that to change Powell’s warmongering commitment.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.0359 will reaffirm the downtrend. A move to 1.0615 will alter the main uptrend.
On the upside, the closest resistance is a pivot at 1.0487. After this level is a short-term retracement zone between 1.0567 and 1.0616.
Daily Swing Chart Technical Forecast
Trader reaction at 1.0442 should determine EUR/USD direction on Thursday.
A sustained move below 1.0442 will indicate the presence of sellers. The removal of the intraday low at 1.0382 will indicate that selling pressure is building. This could trigger an acceleration towards the first major low at 1.0359.
If the sellers exit 1.0359, then expect selling to eventually extend to the main low on May 13 at 1.3054, followed by the main low on January 3, 2017 at 1.0339.
A sustained move above 1.0442 will signal the presence of buyers. If that creates enough bullish momentum, look for a push towards the nearest pivot at 1.0487.