“¢ The USD eases a bit after a slight disappointment from core CPI print.
“¢ Fed rate hike expectations helped limit USD downtick and capped gains.
“¢ Italian budgetary concerns further collaborate towards keeping a lid.
The EUR/USD pair quickly reversed an early dip to an intraday low level of 1.1274 and jumped back above the 1.1300 handle in the last hour, albeit quickly retreated few pips thereafter.
The pair caught some fresh bids during the early North-American session and the uptick was supported by a modest US Dollar downtick, following a slight disappointment from the core inflation figures (excluding food and energy) and real weekly earnings data.
The data, however, did little to dampen expectations for a December Fed rate hike move and the same was evident from a goodish pickup in the US Treasury bond yields, which eventually helped limit any immediate USD downfall and capped any further up-move for the major.
“Inflation at a perfect temperature for a ‘normalizing’ Fed. Core CPI at 2.1% slips toward the 2% target with the headline number 2.5% heading into an energy price decline. No impact on Fed interest rate policy,” Joseph Trevisani, Senior Analyst at FXStreet commented on the US inflation data.
Meanwhile, Italian budgetary concerns remain a key overhang and might continue to dent sentiment surrounding the shared currency, and further collaborate towards keeping a lid on any runaway rally, at least for the time being.
With today’s key US macro data out of the way, market participants now look forward to the Fed Chair Jerome Powell’s scheduled speech during the early Asian session on Thursday, which might play an important role in determining the pair’s near-term trajectory.
Technical levels to watch
Yohay Elam, FXStreet’s own Analyst writes: “Looking up 1.1300, 1.1320 was the high point of the recovery earlier in the day. 1.1355 was a swing low last week and almost entirely coincides with the 50 Simple Moving Average on the four-hour chart. 1.1400 provided support last week and is next in line.”
“Support awaits at 1.1260 which temporarily capped the EUR/USD on Tuesday. 1.1215 is the 17-month low. Further down, we are back to levels last seen in 2017: 1.1110 and 1.1000 are notable,” he added further.
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