EUR/USD hits fresh session tops, moves beyond mid-1.1300s post-US CPI

   “¢   US CPI matches expectations but failed to revive USD demand.
   “¢   Bullish traders shrug off contradicting news on Italian budget.

The EUR/USD pair held on to its mildly positive tone through the early North-American session and is currently placed at the top end of its daily trading range, just above mid-1.13000s post-US inflation figures.

According to the data released by the US Bureau of Labor Statistics, the headline CPI remained flat on a monthly basis in November and eased to 2.2% y/y rate from 2.5% reported in the previous month. Meanwhile, a measure of consumer inflation that strips out food and energy prices – core CPI, ticked higher to 2.2% during the reported month as compared 2.1% previous.  

The readings were mostly in line with consensus estimates, though a fall to the lowest since Jan 2018 pointed to a notable slowdown in inflationary pressure. With the energy index recording its smallest 12-month increase since the period ending June 2017, the headline inflation is expected to further tick lower in the coming month and turned out to be one of the key factors prompting some US Dollar weakness.  

“The Fed can remove inflation from its list of current worries. Core CPI is 2.2%, PCE lower, the economy at 3% and improving wages. Chairman Powell’s note that “The economy is strong, unemployment is near 50-year lows, and inflation is roughly at our 2 percent objective,” is true,” Joseph Trevisani, a senior analyst at FXStreet commented on today’s US inflation report.

It, however, remains to be seen if the pair is able to build on the positive momentum or once again meets with some fresh supply at higher levels, against the backdrop of contradicting report on Italian budget – indicating that Italy has agreed a 2.0% deficit but later denied by the PM office.

Technical levels to watch