EUR/USD Daily Price Forecast – EUR/USD Aims For 1.173 Handle Ahead of Inflation Data

The EUR/USD pair broke above 1.1700 and climbed to 1.1718. The euro has been able to erase most of the losses the followed last week ECB meeting. The move to the upside was boosted by a decline of the US dollar across the board. The weak tone around the greenback started on Friday after US Q2 GDP data and with multiple central bank meetings scheduled this week and market anticipating volatility in favor of major global currencies sold off US Greenback which resulted in US Dollar declining on broader market. US macro data release yesterday saw better than expected results for Pending home sales data and Dallas Fed Mfg Business Index but this news failed to have impact on US Dollar’s price action as market is waiting for updates from Japanese Central Bank monetary policy meet which is scheduled later today. US markets will see Fed FOMC update tomorrow followed by Central bank update from England on Thursday each of which are expected to trigger highly volatile market scenario.

EURUSD Hits Right Notes

EURUSD saw slight range bound movement above 1.17 handles in early hours of Asian market session and is currently trading at 1.1717 with 0.09% increase in value as of writing this article. Investors focus for the day is also on Euro zone inflation data with CPI & GDP scheduled to release at 06:00 GMT, Inflation is expected to rise to an annual rate of 2.0% while growth is set to remain at 0.4% (quarterly). With annual growth of the Eurozone inflation at 2.0% in July, inflation’s development is set to meet the targeted 1.7% average inflation growth rate projected in June’s staff macroeconomic projections of the ECB. Meanwhile, the Fed’s preferred measure of inflation – the core personal consumption expenditure (PCE) price index – is seen rising 2%.An above-forecast Eurozone CPI could put a strong bid under the EUR/USD. However, the gains would be sustained only if the core PCE, scheduled at 12:30 GMT, prints below estimates. On the other hand, the EUR/USD could begin the journey toward the pennant support of 1.1601 if the Eurozone CPI misses estimates and the US core PCE strengthens the case of faster Fed rate hikes.

The Eurozone Q2 GDP reading, also due at 09:00 GMT and the US personal spending and income numbers, due at 12:30 GMT, could also influence the pair. Tomorrow’s market will see the Federal Reserve announce its decision on monetary policy. No change in rates is expected and many analysts expect no relevant signals from the Fed and a limited impact on the US dollar. The pair is currently trading near intra-day high’s but faces strong resistance around 1.1730 handle which if breached could lead to further upside movement targeting 1.1750/60 handle, on the flip side immediate support could be located at 1.1700 followed by 1.1675 and 1.1660. A daily close under 1.1650 would point to further losses and to a potential test of 1.1600.