EUR/USD has printed its first significant higher low, a shift a DailyForex analyst reads as an early sign the pair's medium-term bearish trend may be losing strength. A softer-than-expected US CPI print helped weaken the dollar, but resistance between $1.1463 and $1.1500 still stands in the way of a larger advance.
The euro's first meaningful higher low against the dollar has raised the question of whether the pair's medium-term downtrend is starting to turn. According to DailyForex, EUR/USD may be in the early stages of reversing at least its medium-term trend, with impulsive buying now showing more strongly than the recent bouts of selling.
The move follows a data-driven blow to the dollar. US CPI released the day before came in notably lower than expected, showing an annualised inflation rate of only 3.5% and triggering a selloff in the greenback, the primary driver of the pair.
Where the levels sit
The advance has run since 24th June, after the US Dollar Index failed to break above a key resistance level at 101.39. The analyst describes it as a jerky, unreliable climb, held back by resistance near the round number at $1.1500. The bullish development is the first significant higher low basing off the support level at $1.1414.
Still, the picture is not one-sided. A resistance level at $1.1463 has been tested unsuccessfully from below several times over recent days, while a new higher support level has just printed at $1.1436.
What could cap the move
Despite the bullish factors, the analyst sees the area between $1.1463 and $1.1500 as a formidable obstacle to any significant further advance. The view is that an advance toward $1.1463 is quite likely, yet the price may struggle to establish itself above $1.1500 during the session.
The calendar offers little from the euro side. On the dollar side, PPI data is due at 1:30pm London time, followed by Fed Chair Warsh's testimony before Congress at 3pm.
Source: DailyForex
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