- US Dollar Index stays below 95 in the NA session.
- Inflation in Germany slows down in June.
- Economic expansion in the United States loses momentum in the first quarter.
The EUR/USD extended its losses toward the 1.15 during the first half of the day before gaining traction in the NA session as the greenback failed to preserve its bullish momentum. As of writing, the pair was trading at 1.1580, adding 0.23% on the day.
Earlier today, the data from Germany showed that the inflation measured by the CPI grew by 0.1% on a monthly basis in June following May’s %0.5 growth while the annual CPI eased to 2.1%. In the meantime, the sentiment data released by the European Commission showed that the overall confidence in the European economy continued to weaken in June.
On the other hand, the monthly report from the United States revealed that the real-GDP expanded by 2% in the first quarter, falling short of the market expectation of 2.2%.
After touching its best level of the year at 95.25, the US Dollar Index started retracing its daily gains and dropped below the 95 handle. At the moment, the DXY is down 0.15% on the day at 94.90. Despite the negative impact of the data on the USD, the rising T-bond yields amid an improved sentiment help the index limit its losses.
Friday’s macroeconomic calendar won’t be featuring any significant data releases from the euro area other than German retail sales. In the second half of the day, investors will be focused on the core-PCE price index, the Fed’s preferred gauge of inflation, from the United States.
Technical outlook
“The EUR/USD pair saw a modest uptick after the release of softer-than-expected US data but remains unable to surpass the 1.1600 level, as the negative tone of equities undermines demand of the high-yielding EUR,” writes Valeria Bednarik, Chief Analyst at FXStreet.
“In the 4 hours chart, technical indicators are recovering modestly from oversold readings but lack upward strength, while the pair develops well below bearish moving averages, suggesting that any further recoveries won’t be enough to change the dominant bearish trend. The immediate resistance is the 1.1620/30 region, with a break above it favoring an advance up to 1.1660, yet the pair needs to break above 1.1720 to turn actually positive, something quite unlikely for today.”
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