The Core PCE Price Index is the main measure that the US Federal Reserve has admitted to be using to in determining its policy. The inflation index revealed that price had increased on a month-on-month basis by 0.2%. However, the market consensus was that inflation had increased by 0.3%. The surprise caused the drop of the USD, as lower inflation signals that the Fed does not need to continue its strict monetary tightening policy.
On the EUR/USD charts it has resulted in a move above 1.0500. At mid-day on Friday, the pair was fluctuating between 1.0500 and 1.0550.
Economic Calendar Analysis
The week is set to end with the release of the United States employment data at 13:30 GMT. The data release consists of the US Average Hourly Earnings changes, Non-Farm Employment Change and Unemployment Rate.
Next week, on Monday at 15:00, the US ISM Services Purchasing Managers Index might impact the US Dollar's value.
On Friday, the US Producers Price Index and Core Producers Price Index are set to reveal inflation changes in the United States at the production level. In general, it is assumed that producer level inflation is followed afterwards by consumer level inflation, which the US policymakers want to reduce.
EUR/USD hourly chart
An extension of the ongoing surge would have to pass the 1.0550 mark and the weekly S2 simple pivot point at 1.0580. Afterwards, the 1.0600 and 1.0650 levels might act as resistance.However, a potential decline would look for support first in the 1.0500 level. Further below, take into account the weekly R1 simple pivot point at 1.0486 and the 50, 100 and 200-hour simple moving averages, which are spread out in the 1.0400/1.0450 range.
Hourly Chart
EUR/USD daily chart's review
On the daily candle chart, the recent surge has moved the rate once again above the 1.0350/1.0400 zone. The zone impacted the rate throughout 2021 and 2022 as support and resistance.Meanwhile, it appears that despite being pierced, the 200-day simple moving average has been acting as support.
In regards to the future, note that the 1.0600 and 1.0800 levels acted as resistance in May and June.
Daily chart
Read More: Technical Analysis
Traders are short
On Friday, on the Swiss Foreign Exchange, trader open positions were short, as 58% of open position volume was in short positions.
Meanwhile, trader set up pending orders in the 100-pip range around the pair were 53% to sell the Euro against the USD.
By mid-Thursday, the positions were still 57% long and pending orders were 51% to buy.