Yesterday, the US Dollar received a boost from a higher than expected US CPI report, but quickly lost those gains. This was due to the US Jobless Claims figures also being released, showing a jump to the top of their yearly ranges, mainly due to Hurricane Helene and strikes. The market was already expecting a higher CPI reading, as Treasury yields and the US Dollar had been rising leading up to the release. Overall, the report was slightly hawkish, but the market is now looking for more reasons to continue supporting the US Dollar.
On the EUR side, the market has already priced in a back-to-back 25 bps cut in October from the ECB due to weak data and dovish comments from ECB officials.
Looking at the technical analysis for EURUSD, on the daily chart, the pair bounced around the 1.09 handle after the US CPI release and may pull back towards the 1.10 handle where a broken trendline and key swing level intersect. Sellers may step in at this level with a risk above 1.10 to push the pair down to 1.08, while buyers will look for an upside break towards 1.12.
On the 4-hour chart, a downward trendline was broken this morning, signaling potential upside momentum. Buyers may enter around these levels to anticipate a pullback to 1.10, while sellers will wait for a move back below the trendline for new lows.
On the 1-hour chart, a minor resistance is seen around the 1.0955 level, which was the high set during the US CPI reaction. A break above this level could boost buyer confidence towards 1.10, while sellers may enter with a risk above the resistance to target new lows.
Looking ahead, today will conclude the week with the US PPI and the University of Michigan Consumer Sentiment survey, which could serve as catalysts for market movements.
