US data can’t change the game

EUR/USD Current Price: 1.0947

• The FOMC minutes provided short-term support for the US dollar.
• Inflation in the United States came in higher than expected, while employment figures disappointed.
• EUR/USD flirted with 1.0900 before rebounding, chances of a steeper advance are still low.

EUR/USD continued to approach the 1.0900 mark in the first half of Thursday. The US Dollar (USD) held its strength after the release of the minutes of the Federal Open Market Committee (FOMC) meeting. The document did not surprise investors, although it included some interesting headlines. On the one hand, it showed that almost all participants agreed that the risks of rising inflation had declined and that a “substantial” majority supported a half-point interest rate cut, although some preferred 25 basis points. base (bps).

The FX board showed no reaction to the news, although Wall Street rallied, with the S&P500 hitting a new all-time high. As a result, Asian shares rose, also helped by news from China. The People’s Bank of China (PBoC) said it will start accepting applications from financial institutions to join a newly created financing scheme. Next Saturday, China’s finance minister is expected to hold a press conference detailing plans for fiscal stimulus.

The positive mood persists in Europe, with all local indices trading in the green. However, futures in the United States (US) are trading in a softer tone ahead of the open.

On the data front, Germany released data on retail sales, with annual growth printed at 2.1% y-o-y in August. In addition, the European Central Bank (ECB) released the Accounts of the Monetary Policy Meeting, which showed that ECB policymakers expect inflation to rise again before falling towards their target in the second half of 2025. In addition, officials noted potential headwinds to the near-term outlook. but considered an “unlikely” recession.

Before Wall Street opened, the US released September’s Consumer Price Index (CPI). The index increased by 2.4% from the previous year and by 0.3% from the previous month. The numbers were higher than anticipated, raising some concerns. At the same time, the country released initial jobless claims for the week ended Oct. 4, which rose by 258,000 more than expected.

Higher inflation and weak employment numbers weighed on market sentiment. US indices are under pressure, while the demand for refuges has increased, although it is still far from noticeable.

EUR/USD short-term technical outlook

EUR/USD is trading around 1.0940 after dropping to 1.0907 on the news, a new weekly low. Technically, the daily chart shows the pair well below a simple moving average (SMA) of 20, while it is currently struggling around the mostly flat 100 SMA. Technical indicators, meanwhile, maintain their sharp bearish slopes near oversold readings, which are consistent with the prevailing downtrend.

In the short-term, and according to the 4-hour chart, the risk is tilted to the downside, although the pair may correct higher. Technical indicators are recovering, with the Relative Strength Index (RSI) accelerating higher from oversold readings. However, a bearish 20 SMA provides dynamic resistance at around 1.0960. Beyond that, the 100 SMA crosses below the 200 SMA, which usually means the sellers are in control.

Support levels: 1.0920 1.0885 1.0840

Resistance levels: 1.0960 1.1000 1.1045