The EUR/USD currency pair grew significantly after the US inflation data publication on Wednesday. Now the prices have gone up significantly and a technical pullback is needed for continued growth and the RSI move-out of the overbought zone. The markets look positive, but there might be a change as fundamentals remain the same.
Despite weakening inflation, the rate hike will continue. Such comments were given by the representative of the Fed. This news may trigger the US dollar’s rebound. Yesterday, new data on the US economy was released.
Data on Thursday showed that producer price indexes remained virtually unchanged in June. This further indicates that the economy is entering a disinflation phase.
The number of Americans filing new claims for unemployment benefits unexpectedly fell last week. This implies that the labor market remains tight.
Federal Reserve Governor Christopher Waller said Thursday he’s not ready to call an all clear on US inflation. He favors more rate rises this year, saying the upcoming July meeting should bring an increase.
According to the technical analysis, the EUR/USD currency pair has reached the recovery target. This is the 0.618 Fibonacci level, which was drawn between the 2021 highs and lows. It is quite possible that this level will become a resistance for the euro. In addition, yesterday the uptrend broke out, which signals the acceleration of the price movement. However, before this happens, there might be a top-down testing. In addition, the RSI has reached a local maximum. There are no reasons for breaking through the overbought level at the moment.
Thus, the downside target is the current support level in the form of an uptrend, which corresponds to the price of 1.117. A Stop-loss will should be placed at the continuation of growth and the current highs’ update at 1.126. Since the Fibonacci level has a long-term influence on the prices, it may temporarily move beyond this range. In any case, it will surely be tested.
Decline in the EURUSD currency pair:
Take profit — 1.117
Stop-loss — 1.126
This content is for informational purposes only and is not intended to be investing advice.
