EUR/USD Slips as Hot U.S. CPI Revives Fed Hike Risk

EUR/USD traded lower on Tuesday, falling roughly 0.3% toward 1.1190, after October U.S. CPI came in hotter than expected. Headline inflation rose 0.4% month-over-month versus 0.3% expected, pushing Treasury yields higher and reinforcing expectations for another Fed hike in December. Prior to the report, Governor Christopher Waller backed at least a 25-bps move and left open the possibility of 50-bps if inflation worsens. That put the U.S. Dollar back in control after Monday’s risk-on pullback. The Euro still has support from an increasingly hawkish ECB. Chief Economist Philip Lane said a December hike may be prudent if current conditions persist, while Eurozone inflation has accelerated to a three-year high. The problem today is relative momentum: both central banks look hawkish, but the fresh U.S. inflation surprise gave the U.S. Dollar the cleaner, immediate catalyst. 

EUR/USD Daily Price History

EUR/USD is still in a clean technical downtrend. Price is trading around 1.1150, below every major moving average, with the 5-day near 1.1180, the 21-day around 1.1240, the 50-day near 1.1350, and the 100- and 200-day averages stacked even higher around 1.1435-1.1500. That is a very bearish alignment. The Euro has stopped accelerating lower for the moment, but nothing on the price chart says the trend has actually turned. The first resistance zone is 1.1180-1.1245. That catches the 5-day and 21-day averages and is where one might expect the first meaningful test of any bounce. If EUR/USD fails there, the bearish trend remains intact and 1.1100 comes back into focus quickly. A clean break below 1.1100 opens the door toward 1.1000. 

Trading forex requires an account with a forex provider like tastyfx. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them.