The EUR/USD pair is approaching 1.1450 as the market awaits significant US CPI data
In European trade on Wednesday, the euro began to strengthen against the US dollar, with EUR/USD approaching the 1.1450 level. This shift is occurring as the US dollar weakens and trade tensions between the US and China ease. However, the spike may not have much room to run because everyone is focused on the forthcoming US Consumer Price Index (CPI) data.
Reduced tension, improved mood
The breakthrough in trade talks between the United States and China is one of the primary reasons why the euro has risen. The two major economies have agreed to remove restrictions on vital exports such as rare earth elements while maintaining the tariff truce. This has given people more hope for the global markets and placed pressure on the safe-haven dollar. As geopolitical uncertainties decline, investors gradually adjust their currency exposures, which benefits the euro.
The technical outlook remains muddled
Even if the EUR/USD is rising, it remains in a range, hovering between the 20 and 50-period Simple
Moving Averages (SMA) on the 4-hour chart. The Relative Strength Index (RSI) is just above 50,
indicating a lack of direction. The first level of resistance is 1.1450, then the psychological level of
1.1500, and finally the peak of 1.1575 in April. On the other hand, major support is seen at 1.1380 and 1.1320.
Watch out for inflation and the Fed’s outlook
The US Bureau of Labor Statistics will release the May CPI statistics later today, which will be the
primary benchmark for EUR/USD. Core CPI is predicted to rise 0.3% from one month to the next. If
the figure is higher than expected, the Federal Reserve may become more cautious, strengthening
the dollar and undoing the euro’s gains. On the other side, worse data may contribute to speculation about rate reductions, especially since instruments like the CME FedWatch anticipate a 60% possibility of two cuts in 2025.
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