- The US Consumer Price Index soared by 9.1% YoY in June, a fresh multi-decade high.
- Market participants rushed away from high-yielding assets, Wall Street is in trouble.
- EUR/USD continues to pressure parity, risk-off will likely result in a bearish breakout.
The EUR/USD pair has once again flirted with parity but managed to bounce and trades at around 1.0030 as US traders come to play. The pair traded as high as 1.0100, but gains were short-lived amid US inflation nasty surprise. The US Consumer Price Index soared by 9.1% YoY in June, much worse than the 8.8% expected. The core reading printed at 5.9%, below the previous 6%, but above the 5.8% expected, signaling price pressures are far from a top.
The market did not take well the news, as stocks plunged and the greenback soared. Government bond yields also pushed higher as investors run to price in an even more aggressive US Federal Reserve, if that’s possible. The central bank is expected to hike rates by 75 bps later this month, although the latest CPI figures revived odds for a 100 bps move. It’s also showing that hikes are doing little to take overheated inflation, painting a quite worrisome picture.
Across the pond, the German annual Consumer Price Index was confirmed at 7.6% in May, as previously estimated. On a positive note, EU Industrial Production was up 1.6% YoY in May, recovering from a 2.5% decline in the previous month.
The EUR/USD pair is marginally lower on a daily basis, pressuring a 20-year low of 0.9997. Technical indicators in the mentioned time frame consolidate within extreme oversold levels without signs of changing course. At the same time, the pair develops well below bearish moving averages, reflecting prevalent selling interest.
The 4-hour chart shows that the pair met sellers around a firmly bearish 20 SMA, which keeps extending its decline below the longer ones. The Momentum indicator advances modestly within negative levels, while the RSI indicator consolidates around 34, falling short of suggesting further gains ahead.
Support levels: 1.0000 0.9960 0.9915
Resistance levels: 1.0070 1.0120 1.0155