FXStreet (Mumbai) – The demand for the shared currency made a comeback today, taking the EUR/USD pair higher to 1.0977 ahead of the German CPI reading for October. An upbeat Eurozone sentiment index and German jobless data added to the bullish momentum today.
German CPI seen improving
The preliminary reading is seen improving to 0.2% m/m from 0.0%, while the annualised CPI is seen dropping 0.1%, compared to a 0.2% drop seen in September. The regional German CPI data released earlier today printed better-than-expected and that has kept the EUR on a strong footing ahead of the German CPI release.
In case, the CPI prints in line or higher than estimates, the EUR could extend its upward journey. Moreover, the Fed’s hint at December liftoff has underscored the divergent policy path adopted by the Fed and the ECB. At the same time, it is widely expected to reduce the need for more ECB easing in December. Consequently, a better-than-expected CPI figure could trigger a sharp correction in the EUR/USD pair.
On the other hand, a weaker-than-expected print would underscore the need to do more QE and push the EUR back near its daily lows.
EUR/USD Technical Levels
At the moment, the pair is trading around 1.0965. The immediate resistance is located at 1.10 and the support is seen at 1.0940 (61.8% of Mar-Aug rally). A better-than-expected CPI could push the pair above 1.10 and take it higher to 1.1088 (50% of Mar-Aug rally). On the other hand, a weak CPI print could trigger a break below 1.0940. In such a case, the pair could test 1.10897 (previous day’s low). If the pair break below the same, then it would be a failure of the bullish RSI divergence on the 4-hour chart and it could open doors for a sell-off to 1.0850 levels.
(Market News Provided by FXstreet)