EUR/USD Faces Pressure Amid Inflation Woes: A Comprehensive Mark

EUR/USD Faces Pressure Amid Inflation Woes: A Comprehensive Market Analysis

The EUR/USD pair is experiencing downward pressure as markets shift their focus back to the US Dollar. Recent inflation readings have fallen short of market expectations, contributing to the Euro's decline. Analysts predict a potential return to the 1.0850 - 1.0800 area, with upcoming US Manufacturing PMI data influencing market dynamics.

As the EUR/USD continues its descent into the Thursday market close, testing the 1.0910 level, the Euro has declined by over eight-tenths of a percent against the US Dollar for the day. This critical zone aligns with our Fibonacci areas of attention, where the price encountered resistance, confirming our earlier predictions of a retracement.

The decline in European markets and the Euro followed disappointing Eurozone inflation figures. The annualized Eurozone Core Harmonized Index of Consumer Prices (HICP) inflation for November came in at 3.6%, below the forecasted 3.9%, signaling a retreat from the previous period's 4.2%.

The Euro's slip against the Greenback intensified during Thursday's US session as US inflation also fell short of expectations. The US Personal Consumption Expenditure (PCE) Price Index inflation registered a flat 0.0%, missing the market's modest forecast of 0.1%. The annualized PCE for the year into October maintained the expected 3%, compared to September's 3.4%. The deceleration of inflation at the close end of the curve has triggered a risk-off sentiment, bolstering the US Dollar against major currencies.

Considering both fundamental and technical factors, our analysis maintains a bearish outlook with a target of 1.0800 in extension.

Our preference

Short positions below 1.0965 with targets at 1.0850 & 1.0800 in extension.

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