- Powell noted significant improvement in US inflation.
- There was an unexpected jump in US job creation in May.
- Eurozone inflation eased last month, but underlying price pressures remained high.
EUR/USD price analysis paints a bullish picture as the dollar remains fragile after Powell’s somewhat dovish remarks. Meanwhile, the euro was strong as data revealed that core inflation in the eurozone remained high.
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The dollar weakened on Tuesday after Powell’s speech, in which he took a moderately dovish tone. Powell noted significant progress on inflation, which could allow the Fed to cut rates later this year. Accordingly, investors increased the probability of a September rate cut from 63% to 69%.
Meanwhile, US employment data revealed an unexpected jump in the number of jobs in May, pointing to tough conditions in the labor market. Job vacancies rose to 8.140 million compared to forecasts of 7.910 million. This report should have pushed the dollar higher. However, the market’s focus was on Powell’s speech.
Elsewhere, eurozone inflation eased last month, but underlying price pressures remained high. The main consumer price index fell to 2.5% after a 2.6% increase in May. Meanwhile, core inflation held at 2.9% compared to estimates of 2.8%, as services prices continued to rise.
Therefore, ECB President Christine Lagarde said that there is no rush to reduce borrowing costs. Policy makers need time to watch where inflation will go. Other data from the Eurozone showed that the unemployment rate remained at a low level of 6.4% in May. ECB may delay tapering due to labor market strength. As a result, the odds of a cut in July fell, while those in September rose.
EUR/USD key events today
- US Non-Farm ADP Employment Change
- US unemployment claims
- US ISM services PMI
- FOMC meeting minutes
Technical analysis of EUR/USD prices: Bulls make a second attempt at the 1.0750 barrier
On the technical side, the EUR/USD price is making another attempt to break the resistance level at 1.0750. The first attempt failed when the price fell below the level. However, it respected the 30-SMA as support, a sign that the bulls are in control. At the same time, the RSI remained above 50, supporting the bullish momentum.
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Therefore, there is a good chance that the price will break above 1.0750. If that happens, the bulls will target the next resistance at 1.0850. On the other hand, if the attempt fails, the price is likely to retest the 1.0675 support, remaining in consolidation.
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