EUR/USD Daily Price Forecast – EUR/USD Falls below 1.15 Handle Ahead of US CPI Update

The Euro was very choppy during the session on Thursday as Brexit Woes have started to haunt European market, however EURO got a small breather in early Asian hours as US PPI data was a huge disappointment.  The pair is moving range bound around 1.1481/61 handle as investors await fresh impetus to move forward. We continued to see a lot of noise in this market, as the pair moved inside a larger consolidation range that extends from 1.15 below to the 1.1850 level above. The EUR/USD closed yesterday at 1.1527 – the lowest daily close since July 20, 2017 – having faced rejection at the lower end of the pennant (former support-turned-resistance) on Wednesday. The failure to retake the pennant on Wednesday, followed by a bearish daily close yesterday, validates the last week’s pennant breakdown and has strengthened the case for a drop below 1.15. As of writing this article the pair is trading at 1.1463 down 0.57% on the day.

The Pair Tests 1.146 Handle Ahead of US CPI Update

The data, scheduled for release at 12:30 GMT, is expected to show the cost of living as represented by the consumer price index (CPI) rose 0.2 percent month-on-month in July. An above-forecast print would bolster the already bearish technical setup and open the doors to a drop below 1.15. On the other hand, EUR/USD could have another ago at the pennant resistance (lower end of the pennant) if the US CPI prints below estimates. That said, only a daily close above the 10-day moving average (MA), currently located at 1.1603, and would reduce the bearish pressure. This is because the MA has proved a tough nut to crack in the previous two trading days.

Yesterday’s macro data was a disappointment for US Greenback as US PPI data were well below forecast levels. PPI on M/M basis dropped to 0.0% (Forecast 0.2%) from previous reading of 0.3% while Core PPI on M/M basis dropped to 0.1% (Forecast 0.2%) from previous reading of 0.3%. However better than expected US Initial Jobless Claims helped US Greenback remain firm in broad market.Moving forward investors are waiting for French Non-Farm Payroll data which is expected to provide some amount of volatility in European session ahead of US CPI update later in North American market hours. The 4 hours chart shows that the pair broke below its 20 SMA, accelerating its decline afterward, while technical indicators head south almost vertically, with the RSI now nearing oversold readings. The next support area lies around 1.1420/1.1390, on the flip side a disappointing US CPI could result in the pair rebounding to resistance level around 1.1515/1.1555 price levels.