EUR/USD fails again near 1.1760, US CPI & Fed eyed

• DXY extends correction on the US politics
• 5-DMA at 1.1761 tested.
• Further upside likely ahead of the US CPI, Fed?

After a brief phase of consolidation in early Asia, the EUR/USD pair broke higher to regain the 5-DMA barrier of 1.1761, although failed to sustain at higher levels, now easing back towards the familiar region near the midpoint of 1.17 handle.

The renewed uptick in the spot after the US dollar came under renewed selling pressure on the back of the latest US political headlines. The headlines cited that a Trump’s candidate lost the Alabama US Senate race, which could make it difficult for Trump to pass the tax bill.

Moreover, a profit-taking slide in the US dollar cannot be ruled out ahead of the key risk events, the US CPI and FOMC decision that are likely to have a significant impact on the USD price-direction in the coming days.

However, the upside lacks follow-through, as the divergent monetary policy outlooks between both continents will continue to undermine the sentiment around the Euro. The Fed is on track to hike the interest rates by 25 bps later today. Further, upbeat US PPI data boosts hopes of stronger CPI figures due to be reported in the NA session.

Ahead of the US inflation report, the pair will take fresh cues from the Eurozone employment and industrial production data slated for release in the European session.

EUR/USD Preferred Strategy

Karen Jones, Analyst at Commerzbank, explains: “EUR/USD remains under pressure following its recent failure just ahead of the 1.1976/78.6% retracement and our focus is on the 1.1712 21st November 2017 low. It stays directly offered below the 20-day ma at 1.1816. A close below 1.1712 the recent low should be enough to negate upside pressure and allow for slippage back to the 1.1553 7th November low.”