EUR/USD pressures 1.1000 after US CPI disappointment

EUR/USD Current Price: 1.1014

• The core US consumer price index rose more than expected in August.
• Market participants have reduced bets on a 50 basis point Federal Reserve cut next week.
• EUR/USD has bounced back from near 1.1000, but risk is still to the downside.

EUR/USD heads into United States (US) opening trade near a fresh four-week low of 1.1002 as the US dollar rose following the release of consumer price index (CPI) figures. US CPI rose 2.5% annually in August, down from 2.9% in July, while the core annual figure was printed at 3.2%, unchanged from the previous month, according to the Bureau of Statistics of Labor (BLS).

Moreover, the core monthly index rose 0.3%, more than the anticipated 0.2% advance. The figures dampened hopes for an upcoming 50 basis point (bps) interest rate cut from the Federal Reserve (Fed) next week and boosted risk aversion. As a result, the USD faces most major rivals.

The drop in stocks adds to the picture ahead of the European Central Bank’s (ECB) monetary policy decision. The ECB is expected to announce a second rate cut of 25 bps on Thursday, then focusing on any forward guidance.

EUR/USD short-term technical outlook

The EUR/USD pair fell for the fourth consecutive day and the negative momentum is likely to continue. On the daily chart, the 20 Simple Moving Average (SMA) settled around 1.1090, reinforcing a static resistance zone. The longer moving averages remain more than 150 pips below the current level, with only the 100 SMA showing modest upside. Finally, the technical indicators lack directional strength, but remain below the median lines, in line with another leg from the south.

In the short term, and according to the 4-hour chart, the risk is leaning to the downside. The pair met with sellers around the 20 SMA, which continues to accelerate southward below a now flat SMA of 100. At the same time, EUR/USD is pushing a slightly bullish 200 SMA for the first time in over a month. Finally, technical indicators are heading firmly south within negative levels, reflecting the strength of the sellers.

Support levels: 1.0990 1.0950 1.0910

Resistance levels: 1.1050 1.1090 1.1140

(This story was corrected on September 11 at 13:25 GMT to clarify that US core inflation was higher than anticipated month-on-month, not the headline reading.)