The focus is on the Eurozone inflation numbers and the US employment cost index, scheduled for release at 10:00 GMT and 12:30 GMT, respectively.
The sentiment is quite bearish as the EUR posted losses yesterday, despite strong German inflation. The bears may feel emboldened if the pair ends today below the 50-month SMA of 1.1396. As of writing this article, EURUSD pair is trading near flat at 1.1343 down by 0.01% on the day, below the 50-month simple moving average (SMA) of 1.1396 as investor focus shifts to Eurozone inflation numbers and the US employment cost index updates scheduled to release later today. Risk assets across the world put in for a speculative bounce this past session, but the effort leaves very limited conviction that this is a move that can readily take the helm. In the last five months, the dips below the SMA have been short-lived. Hence, it is the key level to beat for the bears.
Positive US Macro Data Likely To Push EURO to 1.12 Handle
Should the pair close below the 50-month SMA today, then the bears will likely feel emboldened resulting in an even sharp sell-off which would be positive for US Greenback. The EUR/USD pair now seems to have entered a bearish consolidation phase and was seen oscillating in a narrow trading range, just below mid-1.1300’s through the Asian session on Wednesday. The bearish case may strengthen further if the US employment cost index beats estimates, signaling a pick-up in wage-price inflation. An above-forecast Eurozone CPI may offer some relief, however for the EUR to find bids, the US employment cost index needs to miss estimates by a big margin. Meanwhile, a strong follow-through US Dollar buying interest, thanks to the US President Donald Trump’s positive comments over a possible trade deal with China, exerted some additional downward pressure through Tuesday’s trading session.
When looking from technical perspective,. Bearish traders now look for a sustained weakness through the 1.1335 immediate horizontal support, below which the pair is likely to accelerate the fall towards YTD lows, around the 1.1300 handle. A follow-through selling has the potential to continue dragging the pair further towards the 1.1270-65 region, support marked by the lower end of a short-term descending trend-channel formation on the 4-hourly chart. On the flip side, any meaningful recovery attempt might now confront fresh supply near the 1.1375 region, trend-channel resistance, above which a bout of short-covering could lift the pair beyond the 1.1400 handle towards its next hurdle near the 1.1430 area.
