The EUR/USD pair is trading at 1.2223 which is its highest since the 24th of February. The pair is currently nearing its highest level since March ahead of the European inflation data. The US dollar weak run has also played a role in the current price action.
Weak US Dollar
The rising inflation in the United States had been heavily weighing on many investors. The Fed was under renewed pressure to tighten its monetary policy which had many investors worried. The fears continued at an alarming rate as the consumer and producer numbers surged.
The US Dollar Index (DXY) took a nosedive below 90 since Tuesday. The dollar has continued its weak run as records show that the DXY fell by 0.4% on Tuesday morning. The dollar has fallen to 89.82 from 93.23 at the end of March this year. The Fed officials stated that prices will start to moderate in the upcoming months as the economy struggles to be at its feet again.
The EUR/USD pair responded to the weak housing data in the United States. According to the Commerce Department, housing starts tumbled 9.5%. the housing units declined to 1.56 million from the previous 1.733 million in March. Building permits for single-family houses fell 3.8% to a rate of 1.149 million housing units. According to the construction industry, they experienced a shortage of both skilled and unskilled workers after the pandemic struck.
The pair will slightly react to the Eurozone Consumer Price Index (CPI) later today. According to the data released last week, analysts expect the headline CPI to rise by 0.6% leading to a 1.6% year-on-year gain. The core Consumer Price Index is also expected to record a 0.6% MoM and 0.8% YoY rise. The rates are expected to gradually increase as the UK struggles to recover its economy since the pandemic.
Support and Resistance