EUR/USD inches upward, approaching the upper boundary of the monthly range at approximately 1.1485. The US Dollar retreats following PPI data that further dampened expectations for immediate Fed rate hikes. In Europe, officials from the ECB continue to advocate for elevated interest rates as a means to address inflationary pressures. The Euro edges higher on Thursday, with the US Dollar on its back foot, as recent US inflation figures triggered a significant repricing of near-term rate hikes by the Federal Reserve. The EUR/USD pair surged to the upper range of the 1.1400s and is currently probing the upper boundary of the monthly horizontal channel around the 1.1485 level.
Data released on Wednesday indicated that the US Producer Price Index figures contracted against expectations in June, corroborating the deflationary trends underscored by the subdued Consumer Price Index data published the day prior. These releases have led investors to largely dismiss the possibility of a Fed hike in July and reduce expectations for one in September. The US Dollar has declined against its primary competitors, as a result. In Europe, Industrial Production figures fell short on Wednesday, revealing an unexpected contraction in June.
Nevertheless, European Central Bank policymakers have reaffirmed their calls for monetary tightening, which has bolstered the Euro’s bid tone. The EUR/USD pair is currently positioned at 1.1469, reflecting a bullish sentiment in the near term following a rally of approximately 0.85% over the past three days. Momentum appears to be favourable, as the four-hour Relative Strength Index (14) is positioned around 63 and the Moving Average Convergence Divergence remains in positive territory, suggesting that buyers continue to hold sway.
Initial resistance appears within the specified range, close to 1.1485, and aligns with the 38.2% Fibonacci retracement level of the May-June decline, situated around 1.1500. A confirmation above here would expose the June 16 and 17 highs, near 1.1620. On the downside, immediate support is seen at the July 14 low at 1.1378 ahead of the year-to-date low, at 1.1324. Further down, bears may find appeal in the late-May 2025 low, situated at 1.1210.