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  • In August 2021, the annual inflation rate in the euro area was 3.0 percent, up from 2.2 percent in July.
  • The EUR/USD consolidates in a choppy range of 1.1797 – 1.1750 ahead of the European inflation figures from the Eurostat.
  • Forex trading market participants may look for a buy trade above $1.1750 with an initial target of $1.1797 and $1.1825 levels. 

The EUR/USD pair closed at $1.1764 after reaching a high of $1.1822 and a low of $1.1751. The EUR/USD pair dropped sharply on Thursday to its lowest level since August 27th amid the renewed strength in the US dollar. On the other hand, the EUR/USD consolidates in a choppy range of 1.1797 – 1.1750 ahead of the European inflation figures from the Eurostat.

  

If you are interested in trading EUR/USD with forex robots, check out our guide.

The US dollar picked up strength against its rival currencies after the release of robust retail sales data on Thursday, which paved the way for expectations of tapering hints at the upcoming Fed policy meeting next week. The US Dollar Index reached its 3-week highest level at 92.96, and the US Treasury Yield reached 1.35%, which pushed the greenback higher and dragged the EUR/USD currency pair to the downside.

Quick Update on Economic Data 

On the data front, at 13:03 GMT, the Italian Trade Balance in July surged to 8.76B against the forecasted 6.22B and supported the single currency Euro, which capitulated further losses in EUR/USD. At 14:00 GMT, the trade balance from the whole bloc in July dropped to 13.4B against the anticipated 16.8B, weighed on the Euro, and added to the further decline in EUR/USD prices.

From the US side, at 17:30 GMT, the Core Retail Sales rose in August to 1.8% against the anticipated-0.1% and supported the US dollar, which added further loss in EUR/USD. In August, the retail sales also surged to 0.7% against the projected-0.7% and supported the US dollar that dragged the EUR/USD pair on the downside. 

In September, the Philly Fed Manufacturing Index improved to 30.7 from an estimated 18.9 and supported the US dollar, dragging the pair of EUR/USD further to the downside. The US unemployment claims from last week rose to 332K against the expected 325K and weighed on the US dollar, which limited the decline in EUR/USD. At 19:00 GMT, business inventories remained flat with an estimation of 0.5%.

Meanwhile, on Thursday, the president of the European Central Bank, Christine Lagarde, said that the eurozone economy was recovering more quickly than anticipated just six months ago. She attributed the recovery to a rapid vaccination campaign that allowed large sectors of the economy to reopen.

Lagarde said further that the 19 countries sharing the Euro’s combined GDP were now expected to return to their pre-crisis level before the end of the year, even if the growth trend was yet to recover fully. These comments from Lagarde favored the Euro currency but failed to support it as the Focus of the market has been shifted towards the upcoming Fed’s policy meeting.

Eurostat Reports the European Inflation Figures

In August 2021, the annual inflation rate in the euro area was 3.0 percent, up from 2.2 percent in July. The rate was -0.2 percent a year ago. In August 2021, annual inflation in the European Union was 3.2 percent, up from 2.5 percent in July. 

The rate was 0.4 percent a year ago. Eurostat, the European Union’s statistical office, released these figures. Malta (0.4 percent), Greece (1.2 percent), and Portugal (0.4 percent) had the lowest annual rates (1.3 percent ).

Estonia, Lithuania, and Poland recorded the highest yearly rates (all 5.0 percent ). Annual inflation remained constant in one Member State and increased in twenty-six others when compared to July.

European inflation figures
EUR/USD 4-Hour Timeframe

EUR/USD Price Forecast – Daily Technical Levels

Support Resistance

1.1736 1.1807

1.1708 1.1850

1.1666 1.1878

Pivot Point: 1.1779

EUR/USD Price Forecast – European inflation figures in Focus

The EUR/USD consolidates in a choppy range of 1.1797 – 1.1750 ahead of the European inflation figures from the Eurostat. In the 4-hours timeframe, the EUR/USD currency pair is trading with a neutral bias at the 1.1778 level. The double bottom pattern provides immediate support at the 1.1750 level. The formation of candles above this level suggests the chances of a bullish bounce off above the 1.1750 level. Thus, it can lead the market towards the next resistance level of 1.1797.

In the case of a bearish breakout below the 1.1797 level, the chances of a bullish trend remain high until .1825 and 1.1854. On the 4-hours timeframe, the 50-day exponential moving average is likely to provide resistance at the 1.1797 level. Thus, the currency pair suggests a strong bearish bias.

On the other hand, the leading technical indicator, stochastic RSI, is holding in a sell zone. It’s demonstrating a selling trend in the EUR/USD currency pair. Therefore, Forex trading market participants may look for a buy trade above $1.1750 with an initial target of $1.1797 and $1.1825 levels. Alternatively, sell trades can be taken below the $1.1750 level to target $1.1705. All the best!

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