A softer-than-expected U.S. inflation print sent the dollar lower on Tuesday, lifting EUR/USD toward resistance at 1.1420 – 1.1435. Traders trimmed bets on a hawkish Fed after the annual inflation rate fell to 3.5% in June, below forecasts.
The dollar retreated after June inflation came in cooler than markets expected, and EUR/USD used the move to press against a key resistance zone. The annual inflation rate slid to 3.5% in June from 4.2% in May, undershooting the analyst forecast of 3.8%. Core inflation also eased, dropping to 2.6% from 2.9% against expectations of 2.8%.
The softer print put material pressure on the dollar as traders reduced their bets on a hawkish Fed. The rally in oil markets, however, may push prices higher again, so the source notes it remains to be seen whether the pullback in inflation is sustainable.
Dollar index slides toward support
The U.S. Dollar Index lost ground as the report landed. Its nearest support sits in the 100.50 – 100.65 range; a break below 100.50 would open the way toward the 99.75 – 99.90 zone. Traders can track the benchmark through the dollar index.
EUR/USD tests resistance
EUR/USD climbed as the focus stayed on U.S. inflation data, with a German price print adding to the backdrop. German wholesale prices fell 0.7% month-over-month in June, against a forecast of a 0.5% rise.
On the charts, the pair keeps trying to settle above 1.1420 – 1.1435. A clear break above 1.1435 would point toward the next resistance at 1.1500 – 1.1515, and the source notes RSI sits in moderate territory, leaving room to gain momentum if the right catalysts emerge.
The pound tracked the same theme, with GBP/USD trading around 1.3415, up nearly 0.50% on the day near a one-month high. Fed Chair Warsh added a note of caution, saying the CPI decline did not mean the Fed had accomplished its mission.
Sources: FXEmpire, FXStreet (snippet-based)
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