EUR/USD inches higher towards 1.18 as greenback falters

The EUR/USD pair gathered traction in the late NA session and reached its fresh session high at 1.1785. As of writing, the pair was trading at 1.1770, gaining 14 pips, or 0.12% on the day.

This latest modest upsurge seems to be a product of greenback weakness. After losing its daily earnings amid lower-than-expected PPI figures from the U.S., the US Dollar Index moved sideways around its daily opening level of 93.40 before coming under pressure. As the risk aversion continues to dominate the market action on Thursday, US Treasury bonds find demand as safe-havens, pushing the yields down and weighing on the greenback. After dropping to a fresh daily low at 93.22, the US Dollar Index is now at 93.29, losing 0.13% on the day while the 10-year T-bond yield is at 2.2%, down 1.85%.

On Friday, the economic calendar will feature the HICP data from Germany, which is expected to remain unchanged at 0.4% on a monthly basis in July. Later in the day, the CPI from the U.S. could bring some volatility to the markets. The market consensus for the CPI is to improve to 1.8% on a yearly basis in July. A higher-than-expected reading could help the DXY add to its weekly gains.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "...the 4 hours chart shows that the price remains unable to surpass a bearish 20 SMA, while technical indicators pared their recoveries within the negative territory and turned flat. The 1.1770 resistance is still key for the pair, with an advance beyond it probably resulting in an extension beyond 1.1800."

According to the analyst, the pair could face technical supports at 1.1730, 1.1690 and 1.1650 while the resistances align at 1.1770, 1.1820, and 1.1860. 

• EUR/USD still neutral, targets 1.1680 – UOB