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EUR/USD drifts lower near 1.1600 as traders await Eurozone HICP
Eurozone inflation is expected to rise in August, reinforcing the view that the ECB could deliver another September rate increase.
The euro struggled to hold gains near 1.1600 against the US dollar, drifting lower after an overnight bounce that failed to move the pair higher from the 1.1575 to 1.1580 area, according to FXStreet.
At the time of writing, EUR/USD was trading around 1.1600, down nearly 0.1% on the day, as modest USD strength offset the bounce.
Attention is shifting to the preliminary Eurozone Harmonized Index of Consumer Prices (HICP), with economists expecting inflation to move higher in August due to elevated energy prices. That backdrop is tied to expectations for a September rate increase by the European Central Bank.
In the near term, FXStreet said Germany’s CPI rose to 2.9% year over year in August from 2.8% previously, and ECB executive board member Isabel Schnabel has argued for another rate increase. Later in the North American session, traders will also look to US data including the ISM Manufacturing PMI and JOLTS Job Openings, while investors may wait for Friday’s Nonfarm Payrolls to guide USD positioning.
On the technical side, FXStreet noted that acceptance above the 50% Fibonacci retracement of the January to June decline has not held, and a break below the 100-day simple moving average would be a key trigger for EUR/USD downside, with potential levels cited at 1.1501 and, if it falls further, the structural floor near 1.1323. Immediate resistance is near the 38.2% Fibonacci retracement at 1.1611.
Latest closeEUR/USD 1.163 ▲0.3%