Although the earlier data from the euro area showed that the inflation increased more than expected in June (1.3% vs. 1.2% YoY), the shared currency struggled to gather further strength against the USD. As we approach the end of the last trading day of June, the EUR/USD pair is trading at 1.1410, losing 0.27% on the day.
Today's price action seems to be technical in nature as macro data from the U.S. was also largely ignored by the participants. A recent report by Bloomberg claimed that leveraged accounts and some hedge funds booked profits on EUR longs set earlier in the week, according to traders familiar with the transactions who asked not to be named because they are not authorized to speak publicly. Although the economic calendar seems empty in the remainder of the session, month end flows could bring some volatility in the last hour of the session.
- US: Personal income increased $67.1 billion (0.4%) in May
In the meantime, the US Dollar Index is moving calmly around mid-95s, consolidating this week's heavy losses. The heightened expectations of monetary policy tightening by the ECB, the BoE, and the BoC pushed investors away from the greenback all week long.
- ECB's Lautenschläger: Monetary policy should return to normal as soon as can be justified
- US Dollar bid around 95.50… still (very) red for the week
The RSI on the daily graph remains above the 70 handle, suggesting that the pair is likely to make a deeper correction before gathering more bullish momentum. 1.1445 (Jun. 29 high) could be seen as the first technical resistance for the pair ahead of 1.1500 (psychological level) and 1.1535 (May 5, 2016, low). On the downside, short-term supports locate at 1.1400 (psychological level), 1.1300/1.1295 (psychological level/Jun. 28 low) and 1.1230 (May 24 high).
- EUR/USD outlook now shifted to bullish – UOB