EUR/USD Daily Forecast – Euro Turns Lower and Threatens 1.1200 HandleA rally in EUR/USD in the early week was brief as the pair has turned lower to probe support at the 1.1200 level.
The dollar is pushing higher against its major counterparts and the US dollar index (DXY) is seen testing a fairly important resistance level. A break higher from here could signal a more meaningful recovery for the Greenback.
Inflation data from the Euro area reported earlier today was better than expected. Annual inflation is estimated to be up 0.3% in June, from 0.1% in May. The largest contributors to the upward price pressure were food, alcohol & tobacco while energy price declined notably.
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Later in the North American session, the US will release its latest consumer confidence figures as well as PMI numbers from ISM-Chicago.
Fed members Williams and Brainard are scheduled to speak and Fed chair Powell will be testifying before the House Financial Services Committee.
The markets could be more volatile than usual as today marks the last day of the month and the quarter. Investors often adjust their positions during this time, leading to heightened market activity.
The US dollar index is showing renewed upward momentum and is testing the upper bound of a range that has been playing out since the start of the month.
If the DXY break higher here, it could signal a broader recovery for the greenback. This view is supported by the potential monthly candle for DXY. If the index closes near current levels or higher, it would result in a bullish reversal candle on a monthly chart.
EUR/USD is in the process of posting a similar candle as it has given up a bulk of its early gains for June. However, the pair has mostly consolidated within a range this month and the pair still has some ways to go for a bearish break.
The level to keep an eye on is 1.1200 in the session ahead as it held the pair higher late last week. A bearish break of it could lead to a decline towards support at 1.1132.