- EUR/USD dropped below 1.0600 on Wednesday, heading towards 1.0550.
- A short-lived bounce following the US CPI inflation data is expected to fade.
- The Euro is on track to close lower against the US Dollar for the fourth consecutive day.
EUR/USD continued its decline on Wednesday, dropping to 1.0550 and only seeing a modest rebound from its 54-week lows following the release of the US Consumer Price Index (CPI) for October, which came in largely in line with market expectations. The Euro remains under pressure as investors struggle to find compelling reasons to buy the currency, leaving EUR/USD vulnerable to broader US Dollar flows.
US CPI for October showed a 0.2% month-over-month increase, matching the previous month's print, while the 'supercore' CPI, which excludes volatile items like food and energy, rose 4.37% year-over-year, slightly above the prior period's 4.26%. While the data did not show signs of significant progress toward the Federal Reserve's inflation targets, it also failed to provide any major surprise.
The US Dollar eased slightly after the CPI release, giving EUR/USD a brief opportunity to recover from its recent lows. However, momentum remains weak as global markets now look to US labor market data for clues on potential future Fed rate cuts.
EUR/USD Price Forecast
With the Euro testing its 54-week lows against the US Dollar, the pressure is on for buyers to step in and establish a floor before EUR/USD falls below the critical technical support around 1.0500. Just seven weeks ago, the Euro was trading near a 1-year high against the Greenback, just shy of 1.1300, highlighting the sharp reversal in sentiment this year.
EUR/USD Daily Chart
