EUR/USD has been climbing steadily within an ascending channel until Wednesday, when the US dollar[4] experienced a sell-off. Despite US inflation reaching a near 40 year high - coming in at the forecasted figure of 7% - the release was interpreted by markets as a bit of a letdown, sending the dollar tumbling.
Markets had already priced in an aggressive Fed response to rising inflation, propping up the dollar, and therefore, anything less than a surprise above 7% was likely to disappoint. The EUR/USD pair passed 1.1400 with ease but fell short of 1.1500, proving too hot to handle
Major Risk Events for the Week Ahead
The economic calendar has started to fill up in the third full week of January. Today we have a Eurogroup meeting discussing economic adjustments and resilience among other topics. Tomorrow we have the ZEW economic sentiment index and Wednesday the all important core inflation for the Eurozone – which is not expected to be a market mover as the headline figure is where energy and food costs are likely to show a much higher reading of inflation.
The week comes to a close with speeches from a couple of high profile ECB speeches and flash Markit manufacturing PMI data.
Customize and filter live economic data via our DaliyFX economic calendar[5]
Key Technical Levels for EUR/USD This Week
After a failed attempt at 1.1500, the upward momentum in EUR/USD seems to have faded. Bear in mind that most of the recent move to
