EUR/USD and $1.10 Hinged on US Producer Price Index Numbers

Highlights

• On Friday, inflation figures from France will draw interest early in the European session.
• However, the US Producer Price Index Report and Michigan Consumer Sentiment figures will have more impact.
• The nearer-term technical indicators remained bearish, with sub-$1.0950 in view.

On Thursday, the EUR/USD rose by 0.06% to wrap up the day at $1.09808. The US CPI Report delivered a choppy afternoon session. While inflation numbers fell short of forecasts, core inflation remained sticky, capping the upside on the day.

Today, finalized July inflation figures from France will draw interest. The EUR/USD will likely respond to revisions, with no other economic indicators to consider this morning.

With the European economic calendar on the light side, investors should track ECB chatter. However, no ECB Executive Board Members are on the calendar to speak today, leaving commentary with the media to move the dial.

The US Session

It is another big day ahead, with US producer price index numbers and the Michigan Consumer Sentiment survey in focus. A more marked increase in the producer price index and improving consumer confidence would give the Fed more food for thought.

Economists forecast the producer price index to increase by 0.2% in July, following a 0.1% increase in June. However, economists expect the Michigan Consumer Sentiment Index to slip from 71.6 to 71.0.

The producer price index shows the direction of selling prices received by domestic producers. Significantly, the PPI includes selling prices from the first commercial transaction for products and services, a leading indicator for consumer price inflation. Upward trends in the producer price index signal a pickup in consumer inflationary pressures.

Beyond the economic calendar, investors should monitor the news wires for Fed chatter throughout the day.

EUR/USD Price Action

Daily Chart

The Daily Chart showed the EUR/USD remained below the $1.1015 – $1.1060 resistance band. However, the EUR/USD held above the 50-day ($1.09742) and 200-day ($1.07990) EMAs, sending bullish near and longer-term price signals.

A EUR/USD hold above the 50-day EMA ($1.09742) would give the bulls a run at the $1.1015 – $1.1060 resistance band. However, a fall through the 50-day EMA would bring the $1.0900 – 1.0850 support band into play.

Looking at the 14-Daily RSI, the 48.17 reading sends moderately bearish price signals. The RSI suggests a fall through the 50-day EMA and the upper level of the $1.0900 – 1.0850 support band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the EUR/USD sits below the $1.1015 – $1.1060 resistance band. The EUR/USD remains below the 50-day ($1.09920) and 200-day ($1.09981) EMAs, sending bearish near and longer-term price signals.

The 50-day EMA eased back from the 200-day EMA this morning, a bearish price signal. Failure to move through the EMAs would bring sub-$1.0950 and the $1.0900 – 1.0850 support band into play. However, a EUR/USD move through the EMAs would support a breakout from the $1.1015 – $1.1060 resistance band to target $1.11.

The 14-4H RSI at 50.07 sends moderately bullish EUR/USD price signals, with buying pressure outweighing selling pressure. Significantly, the RSI suggests a move through the EMAs to bring the $1.1015 – $1.1060 resistance band into play.

Price action today hinges on the US PPI Report and consumer sentiment.