The Euro (EUR) inched higher against the US Dollar (USD) on Friday, increasing the price of EUR/USD to more than 1.0600 ahead of the US Consumer Price Index (CPI) report which is considered a key gauge for inflation. The technical bias remains bullish because of a higher low in the recent downside wave.
As of this writing, the pair is being traded around 1.0616. A hurdle may be noted near 1.0622, the pink trendline resistance as well as 50% fib level ahead of 1.0629, the short term horizontal resistance area and then 1.0677, the high of the last major upside rally on hourly timeframe as demonstrated in the given below chart. A break and hourly closing above the 1.0677 resistance shall incite renewed buying interest, validating a move towards the 1.0700 resistance zone which is a psychological level.
On the downside, a support may be seen near 1.0600, the short term horizontal support area as demonstrated in the given above hourly chart along with the 61.8% fib level. A break and hourly closing below the 1.0600 support shall incite renewed selling pressure, validating a move towards the 1.0588 which is the low of last major downside move on hourly timeframe. The technical bias shall remain bullish as long as the 1.0588 support zone is intact.
How EUR/USD Reacted on Past CPI Releases?
The EUR/USD fell by more than 30 pips after the release of US Consumer Price Index data last month. The CPI registered 0.1% reading in February as compared to the forecast of 0.0%, the report released on 15th March 2017 revealed.
The pair however didn’t show any noticeable volatility after the release of January’s CPI report because the actual figure was in line with the projections of economists i.e. 0.3% vs 0.3% forecast.
Considering the overall technical and fundamental outlook, buying the pair around current levels can be a good strategy in short to medium term.