Although the EUR/USD pair remained stuck in a tight 40-pip range on Tuesday, it is looking to close the third day in a row with losses. As of writing, the pair is trading at 1.1350, down 0.14% on the day.
Today's price action was driven by the fluctuations witnessed in the US Dollar Index and it was mostly technical as the economic calendar didn't offer any significant data. After easing to 95.80 in the early trading hours of the European session, the US Dollar Index reversed course and is now moving calmly around the 96 mark, up 0.4% on the day. The index is expected to stay around that level for the remainder of the session as American markets are closed due to the Independence Day holiday.
Speaking in Rome on Tuesday, Peter Praet, Member of the Executive Board of the ECB, said that although measured inflation remains exceedingly volatile and metrics of underlying price pressures continue to be subdued, the Governing Council was confident that headline inflation would gradually move towards their objective.
- ECB's Praet: Metrics of underlying price pressures continue to be subdued
If more hawkish comments keep coming from the ECB officials, markets' prospect of a tightening move could continue to drive the pair higher, bringing the correction to an end. Tomorrow's economic docket will be featuring Markit Services PMI and Retail Sales from the euro area before the FOMC releases its June meeting minutes later in the NA session.
- ECB: Expect no change in policy rates or asset purchases in 2017 – Goldman Sachs
The RSI indicator on the H1 and H4 charts show neutral conditions in the short-term. 1.1445 (Jun. 29 high) aligns as the initial hurdle for the pair ahead of 1.1500 (psychological level) and 1.1535 (May 5, 2016, low). On the downside, supports could be seen at 1.1300/1.1295 (psychological level/Jun. 28 low), 1.1230 (May 24 high) and 1.1200 (psychological level).
- EUR/USD strong support at 1.1330 – UOB