EURUSD Surges in the Wake of U.S Negative Data Releases

EURUSD Surges in the Wake of U.S Negative Data Releases 

Throughout the week, a series of economic data releases concerning the USD have been observed.

FUNDAMENTAL VIEW:

On Tuesday, August 13th at 4:30 PM GMT+4, there was a negative data release on Core PPI and PPI m/m at 0.0% and 0.1% respectively. Both fell below the forecasted figures of 0.2%. The following day, Wednesday 14th at the same time, inflation data (CPI y/y) also came in lower than expected at 2.9% against 3% forecast, further weakening the USD. These results indicate a decrease in inflation in the US, potentially paving the way for a rate cut by the Fed during the September policy meeting. The overall impact of these data releases has made the USD less appealing in the global market. Later on, we expect retail sales and unemployment claims by 4:30pm GMT+4, a positive reading would likely strengthen the dollar while a negative reading could pressure the USD further, according to analysts.

Figure 1 EURUSD, Daily time frame, TradingView

TECHNICAL VIEW:
Following a disappointing week of US data releases, the Dollar Index (DXY) has taken a bearish turn, testing the support level at 102.352 on Wednesday. As of the latest update, it is retracing at 102.606. The overall outlook for the Dollar remains cautious.
EUR has been bullish in the cause of the week as a result of the negative data from the bureau of labor statistics. The EURUSD successfully closed above the January high of 1.1000 phycological level on Wednesday which served as resistance. The price could be heading to the next major resistance at 1.1140 which was last tested on Thursday 28th Dec, 2023 preceding July Wed, 26th. After the current peak, retracement to the 50, 61.8 and 78.6 levels of the Fibonacci at 1.0914, 1.0882 and 1.0838 respectively can’t be ruled out. If the price successfully closes below 1.0780, technical analyst expects further decline, however the place of retracement to the upside can’t be ruled out.