EURUSD rose on Wednesday to stay on course for a third successive session of gains, trading at 1.0754 at the time of writing, with an intraday rise of 0.1 percent. The US dollar has cracked under pressure from not only the euro but also other major currencies as a series of soft economic data weaken it. The DXY index, which weighs the US dollar against six other major currencies printed red candlesticks in the last two trading sessions and was down by 0.3 percent this week at the time of writing.
After registering higher-than-expected Initial Jobless Claims last week, the US economy followed it up with a lower-than-expected Retail Sales data on Tuesday. It registered a 0.1 percent growth in retail sales in May, rising from a 0.2 percent contraction in April, but falling below the consensus forecast growth figure of 0.3 percent. That has sent a strong signal that the Federal Reserve could consider reducing interest rates in September to cushion the world’s largest economy from the adverse effects of high interest rates.
Meanwhile, the euro’s leverage against the US dollar is limited, thanks to the pressure coming from France’s political landscape in the aftermath of European parliamentary elections. The Eurozone’s headline inflation stood at 2.6 percent in May, which is some way above the ECB’s target of 0.2 percent. That said, the bank already indicated its discomfort with higher-for-longer interest rates by cutting interest rates by 25 basis points from 4.0 percent to 3.75 percent on June 6. Therefore, that will likely put a lid on gains by the euro in the coming weeks.
Technical analysis
The momentum on the EURUSD trading pair currently favours the buyers, with the pivot mark likely to be at 1.0750. The first resistance is likely to be at 1.0760, but the pair could head higher and test 1.0770 if the buyers breach that mark. Conversely, a break below 1.0750 will indicate control by the sellers, and the first support is likely to be at 1.0735. A break below that mark will invalidate the upside narrative and could build the momentum to move the pair lower to test 1.0725 in extension.
