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The euro fell by about 0.1% against the dollar in the European trading session while the higher inflation might lead the ECB to stick with its tightening cycle.

• The Euro Area’s consumer price inflation rate slightly increased to 7.0 percent in April 2023 from March’s 13-month low of 6.9 percent.
• The rate remains significantly above the European Central Bank’s target of 2.0 percent, and the core index eased to 5.6 percent but remained close to the all-time high of 5.7 percent from the previous month.
• Energy prices rebounded 2.5 percent (vs -0.9 percent in March), and the cost of services rose at a faster 5.2 percent (vs 5.1 percent in March).
• Inflation slowed for food, alcohol & tobacco (13.6 percent vs 15.5 percent) and non-energy industrial goods (6.2 percent vs 6.6 percent).
• On a monthly basis, consumer prices rose 0.7 percent, marking the third straight month of increase.
• The above data suggests that the European Central Bank is likely to continue its efforts to combat inflation.

In the daily interval of the EUR/USD currency pair, there may be supportive core long buyers for the euro around the developing VWAP or lower value extreme. Short-term traders may look to lean on the extremes to conclude rotational scenarios as the market establishes a balanced price range. From a macro perspective, the decade’s VWAP shows dollar long trading, which has caused the euro to decline. However, any dovish hints from the US Fed regarding its rate-hike path, which narrows the interest rate hike gap, could potentially uplift the euro against the dollar.

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Looking at the intraday perspective, there have been some dollar long trades around the prior VWAP close level. However, the market may find euro buyers around the mentioned lower extreme of the daily bracket. The developing VWAP could be used to add to core dollar short positions while an auction back into the prior price range could advertise a rotation higher in favor of the euro.

Currently the intraday perspective might be able to build core long positions for the euro as the rate auctioned back into the developing value to find potential support around the so called DVAL for rotations towards the upper DVAH.

1 Month Ago

The dollar index against the major currencies trades slightly higher with about 0.1% while with a bearish nuance which might support the euro in the New York trading session, depending on the inflow of the economic data.

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