EUR/USD inched lower earlier on Thursday after the release of the European inflation data. The currency pair was trading 0.29% lower at $1.1675.
European Inflation Outlook
According to data published by Eurostat on Wednesday, the euro area annual inflation rate came in at 2.2% in July 2021. It jumped from 1.9% in June and 0.4% a year earlier. The annual inflation for the European Union climbed to 2.5% in July 2021, up from 2.2% in June and 0.9% in 2020.
The largest boost to the annual euro area inflation rate in July came from energy, which was up 1.34%. The monthly inflation in July declined 0.1%, which was in line with investors’ estimates. Eurozone core consumer price index (CPI) came in lower at 0.7% YoY, albeit it hit estimate forecasts.
In June 2021 compared with May 2021, seasonally adjusted production in the construction sector slipped 1.7% in the eurozone. According to estimates from the Statistical Office of the European Union, it fell 1.2% in the EU.
Compared with June 2020, production in construction increased by 2.8% in the euro area and by 3.5% in the EU.
The EUR/USD pair will react to the US weekly initial jobless claims data. Economists polled by Dow Jones expect the jobless claims to decline to 363,000, down from 375,000 in the previous week. Minutes released by the Federal Reserve on Wednesday hinted at an earlier tapering of its asset purchases.
EUR/USD Technical Analysis
The daily chart indicates that the EUR/USD pair has been on a downward trend. Along the way, the pair has formed what looks like a broadening formation, emphasizing the bearish view.
The currency pair is trading below the 50 and 100-day moving averages, signaling a negative trend. Its Relative Strength Index (RSI) has been on a decline since the start of the week. At 34, its RSI is 4 points above the oversold region, reinforcing the bearish trajectory.
Therefore, the pair will probably extend its losing streak. If this happens, the bears will be targeting the support at $1.16075. On the flip side, a move past the 100 DMA at $1.1968 will invalidate this view.