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EUR/USD rises toward 1.1420 as softer US inflation weighs on the dollar

US CPI fell 0.4% month over month in June, cooling annual inflation to 3.5% and trimming expectations for a July Fed rate increase.

Reported · Written up by our desk · Major Pairs

EUR/USD rose on Tuesday, trading near 1.1420 as the US dollar weakened after softer-than-expected US inflation data, according to FXStreet. The euro’s recovery was attributed more to broad greenback selling than to developments in the eurozone.

The US Consumer Price Index declined 0.4% month over month in June, versus expectations for a 0.1% drop, after May’s 0.5% increase. Annual inflation slowed sharply to 3.5% from 4.2%, below the 3.8% forecast, while core CPI was flat on the month and the annual underlying rate eased to 2.6% from 2.9%.

Other employment signals also pointed to less momentum, with the ADP Employment Change four-week average falling to 19.75K from 21K, FXStreet said. The data reduced expectations for a Federal Reserve rate increase in July, though Fed Chair Kevin Warsh maintained a relatively hawkish tone in congressional testimony, reiterating the Fed’s commitment to controlling persistent inflation.

Technically, FXStreet noted EUR/USD held a mildly bullish bias around 1.1423 on the four-hour chart, above the 20-period and 100-period simple moving averages. Immediate resistance was cited near 1.1434 and 1.1446, while support was seen around the 20-period SMA at 1.1418 and the nearby 1.1416 level.

Latest closeEUR/USD 1.142 ▲0.2%

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