The Euro had additional buying pressure against the US Dollar, pushing the price to move near a month high at the 1.0830 level.
Higher US CPI Attracted USDX Sellers
Conversely, the US Dollar Index (USDX) faced substantial selling pressure, pushing the price below the support level of 105.00, thereby reaching its lowest level in eight weeks. This decline is a continuation of the previous week's decline from its peak near 106.00. Moreover, the speculation is increasing that the Federal Reserve may begin instituting rate cuts as early as the summer of 2024.
A broader weakening of US yields supported USDX bears, particularly in the wake of October's higher-than-expected inflation data. As per the latest report, consumer prices in the US increased by 4.0% annually, with the Core reading (excluding food and energy costs) indicating a 3.2% year-on-year surge.
Euro Bull Is Not Confirmed
Concerning the European Central Bank (ECB), recent Council member statements consistently indicate that the current restrictive posture will be paused for an extended period of time. The rationale behind this position is the persistently high inflation rate, which surpasses the target.
The Euro strengthened further in the current month as economic sentiment improved in Germany and the Eurozone as a whole, reaching 9.8 and 13.8, respectively. However, the GDP Growth Rate in the eurozone experienced a marginal expansion of 0.1% over the past twelve months and a minor contraction of 0.1% quarter-on-quarter in Q3.
EURUSD Technical Analysis
EURUSD maintained a strong bullish stance after the US CPI release, pushing the price to be stable above the 1.0800 psychological level. However, the price may face a challenge to overcome the 1.0945 resistance level before forming a stable trend.
The first scenario would be to have a bullish break above the 1.0945 level and grab available buy-side liquidity before returning below the 1.0900 level. In that case, a short opportunity could open, where the main aim would be to test the 1.0645 support level.
On the bullish side, the upward continuation above the 1.0945 level could extend toward the 1.1000 threshold before reaching the 1.1149 resistance level.