The EUR/USD pair recorded a 50-pip jump in the first hour of the NA session and approached its 14-month top, which it set on Wednesday at 1.1473. While holding on to its daily gains, the pair is trading at 1.1467, up 0.6%, or 70 pips, on the day.
The pair's upsurge on Friday was fueled by the greenback sell-off, which was provoked after the macro data from the U.S. hurt the expectations of the Fed's prospects for further policy tightening moves. According to the data released by the U.S. Bureau of Labor Statistics on Friday, the Consumer Price Index in the U.S. rose 1.6% over the last 12 months after having risen by 1.9% in May and missing the market consensus of 1.7%. Moreover, the retail sales and the consumer confidence numbers both came above the expectations.
- US: CPI and retail sales data casts doubt on Fed rate hiking strategy - ING
As investors started to get rid of their US dollar, the DXY dropped below the 95 handle for the first time since late September and is now at 94.93, losing 0.67% on the day.
With today's elevation, the EUR/USD pair is headed for its highest weekly close since the last week of April 2016, when the pair finished the week at 1.1466. In case the pair is above 1.1466 when trading comes to an end today, it will record the best close since January 2015.
Although the RSI indicator on the daily graph is showing overbought conditions, the pair may be poised for further gains next week when the ECB releases its monetary policy statement on Wednesday. Granted that ECB President Draghi announces that the QE tapering could start in early 2018, confirming this week's WSJ story, the shared currency could easily aim for 1.15.
Valeria Bednarik, Chief Analyst at FXStreet, writes, "from a technical point of view, the pair recovered above a bullish 20 SMA, whilst the 100 SMA accelerated higher, surpassing the daily ascendant trend line coming from June 28th, both acting as support in the 1.1350/60 region. The momentum indicator turned north, but remains below its 100 level, while the RSI accelerated higher, now around 56, maybe not enough to support a bullish breakout, but indeed sufficient to limit the downside."
According to the analyst, resistances for the pair could be seen at 1.1490 and 1.1525 while the supports are located at 1.1400, 1.1355 and 1.1310.
Data releases from the U.S.
- US: Consumer Price Index was unchanged in June on a seasonally adjusted basis
- US: Retail and food services sales for June 2017 were $473.5 billion, a decrease of 0.2%
- US: Industrial production rose 0.4% in June for its fifth consecutive monthly increase
- US: Confidence in future economic prospects continued to slide in early July - UoM