EUR/USD Price Forecast: A Return to $1.055 Would Bring $1.060 into Play

It is a quiet day on the Eurozone economic calendar for the EUR.

This morning, the German Producer Price Index was an area of market interest, with inflation continuing to be the market’s bugbear.

Later today, ECB President Christine Lagarde is also due to speak, with any chatter on the economic outlook and monetary policy needing attention.

German Wholesale Inflation Delivers EUR Support

In May, Germany’s Producer Price Index increased by 1.6% month-on-month, following a 2.8% jump in April. Economists had forecast a 1.5% rise. Compared with May 2021, the Producer Price Index surged by 33.6% compared with 33.5% in April.

According to Destatis,

• Year-on-year, energy prices were up 87.1%, with natural gas (distribution) up 148.1% from May 2021.
• Electricity prices increased by 90.4%, with redistributors having to pay 165.2% more than in May 2021.
• There were also increases in prices for intermediate goods (25.1%) and non-durable consumer goods (14.7%).
• Prices for durable consumer goods increased by 9.4% year on year.

Market reaction to the numbers was bullish, with the EUR striking a current day high of $1.05429 before easing back.

EUR/USD Price Action

At the time of writing, the EUR was up 0.22% to $1.05160.

A bullish start to the day saw the EUR rise from an early low of $1.04270 to a high of $1.05429 before easing back.

The EUR left the Major Support and Resistance Levels untested early on.

Technical Indicators

The EUR will need to avoid the $1.0500 pivot to retarget the First Major Resistance Level at $1.0555 and Friday’s high of $1.05608.

Demand for riskier assets will need to improve to support a breakout from this morning’s high of $1.05429.

An extended rally would test resistance at $1.060 and the Second Major Resistance Level at $1.0616. The Third Major Resistance Level sits at $1.0732.

A fall through the pivot would bring the First Major Support Level at $1.0438 into play.

Barring an extended sell-off throughout the day, the EUR should avoid sub-$1.040. The Second Major Support Level sits at $1.0383.

Looking at the EMAs and the 4-hourly candlestick chart (below), it is a bearish signal. The EUR sat below the 50-day EMA, currently at $1.05268. The 50-day EMA fell back from the 100-day EMA. The 100-day EMA eased back from the 200-day EMA: price negative.

A move through the 50-day EMA would support a run at the First Major Resistance Level and a look at $1.060.

Next Up

Late in the European session, ECB President Lagarde will draw attention.

With the US markets closed, there are no US stats for the markets to consider. The lack of stats will leave the investors to track any FOMC member chatter that deviates from last Wednesday’s script.