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Highlights
- The EUR/USD had a bullish start to the Thursday session.
- It is a relatively busy day on the European economic calendar, with German producer price index numbers for June in focus.
- However, US economic indicators will also need consideration later today.
It is a relatively busy day ahead for the EUR/USD. Producer price index numbers from Germany will draw interest early in the European session.
Investor sensitivity to the producer price index has intensified because of the weak demand environment. Another sharp fall would be bearish. Economists forecast the producer price index to fall by 0.4% in June, following a 1.4% slide in May.
With inflation numbers from Wednesday supporting the more hawkish ECB policy bets, today’s numbers could signal more doom and gloom for the German economy.
ECB forward guidance continues to provide EUR/USD support. ECB President Christine Lagarde and Executive Board Members have remained committed to taming inflation. However, the ECB has shifted to data dependence beyond the summer break.
Investors should, therefore, track ECB chatter, with investors looking for post-summer policy intentions. No ECB members are on the calendar to speak today, leaving commentary with the media to move the dial.
The US Session
US jobless claims and the Philly Fed Manufacturing Index will move the dial. However, with the US manufacturing sector contracting for the eighth consecutive month in June, according to the ISM survey, the jobless claims will likely have more impact.
Upbeat numbers would support the theory of a soft landing. However, tighter labor market conditions would also pressure wage growth. Increasing demand for goods and services would push the prices for goods and services higher.
EUR/USD Price Action
Daily Chart
The Daily Chart showed the EUR/USD broke through the $1.12 psychological resistance level and the upper level of the $1.1180 – $1.1221 resistance band this morning. Avoiding sub-$1.12 would give the bulls a look at $1.13. However, the EUR/USD would need to break down resistance at $1.1250 to target $1.13.
Looking at the EMAs, the EUR/USD sat above the 50-day ($1.09555) and 200-day ($1.07644) EMAs, signaling bullish momentum over the near and longer term.
Notably, the 50-day EMA pulled further away from the 200-day EMA and reflected bullish momentum.
Looking at the 14-Daily RSI, the 71.28 reading signaled the EUR/USD in overbought territory. However, the EMAs support a EUR/USD breakout from the $1.1221 – $1.1180 resistance band to target $1.1300.
4-Hourly Chart
Looking at the 4-Hourly Chart, the EUR/USD sits above the $1.12 psychological level and the $1.1180 – $1.1221 resistance band.
The EUR/USD remains above the 50-day ($1.11483) and 200-day ($1.09825) EMAs, sending bullish near and longer-term signals. Significantly, the 50-day EMA pulled further away from the 200-day EMA, signaling a run at $1.13.
The EUR/USD must avoid sub-$1.1200 to support a sustained breakout from the $1.1180 – $1.1221 resistance band to target $1.13. However, a fall to sub-$1.1200 would bring the 50-day EMA ($1.11483) into view.
The 14-4H RSI at 57.95 sends bullish EUR/USD price signals. Significantly, the RSI aligns with the 50-day EMA, supporting a run at $1.13.
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