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• The EUR/USD pair rose above a crucial resistance level on Wednesday.
• Germany published stronger-than-expected consumer inflation data.
• The US released weak GDP, trade deficit, and jobs data.

The EUR/USD exchange rate jumped above a key resistance level after the relatively mixed economic data from the US and Germany. It rebounded to a high of 1.0911, the highest point since August 22nd.
 

Mixed US and German data

The EUR to USD exchange rate held quite well after the latest economic numbers from the US and Germany. In Germany, data showed that inflation remained stubbornly high in August, putting pressure on the European Central Bank (ECB).

The German CPI came in at 6.1% in August, lower than 6.2% in July but higher than the median estimate of 6.0%. On a MoM basis, inflation rose by 0.4% as natural gas prices bounced back during the month.

These numbers mean that the ECB has more work to do to bring it to the 2.0% target level. The challenge is that more rate hikes will lead to a relatively weak economy since liquidity in the region has almost dried up. Data published this month showed that money supply has retreated to the lowest level in years.

The EUR/USD pair also rose after another set of weak US data. According to ADP, the nonfarm employment change dropped from 312k to 177k. This decline was lower than the median estimate of 195k. 

The weak report came a day after a separate report by the Bureau of Labor Statistics (BLS) showed that the number of vacancies dropped in July.

Another set of data also showed that the economy was not doing well. The economy expanded by 2.1% in Q2, lower than the previous estimate of 2.4%. At the same time, the country’s goods trade deficit widened to over $91.1 billion in July.
 

EUR/USD technical analysis

(Click on image to enlarge)

The hourly chart shows that the EUR/USD pair has been in a strong bullish trend in the past few days. Along the way, the pair has formed a descending channel shown in black. It managed to move above the upper side of the channel after the weak US economic data. 

Further, the EURUSD pair rose above the Ichimoku cloud while the Relative Strength Index (RSI) rose above the overbought level. Therefore, the pair will likely continue rising as investors price in a more cautious Fed ahead. The key level to watch will be at 1.1000.

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