The EUR/USD pair is battling below 1.1000 on Thursday during Asian trading hours, as the US Dollar adheres to recovery gains. The Euro was hampered by weaker-than-anticipated German and Spanish inflation data on Wednesday. Investors anticipate new impetus from the Eurozone inflation data that is released on Thursday.

Following four successive days of growth, the EUR/USD fell from a three-month high above 1.1000. Notwithstanding the retreat, the prevailing bias continues to be in favor of the upside. On the contrary, the Relative Strength Index (RSI) is presently surpassing 70 and is on the verge of inverting, indicating the possibility of upcoming consolidation. A daily close substantially greater than 1.1010 would pave the way for additional gains.

The 4-hour chart indicates that the risk remains skewed to the upside. Support for the pair has been established at the 20-Simple Moving Average (SMA). A strong breach below 1.0960 would indicate additional declines, with 1.0925, in proximity to an upward trendline, serving as the subsequent support. To the upside, it is crucial to consider the resistance located in the 1.1000 area. The subsequent point of resistance, situated above recent peaks, is 1.1050.

Despite risk appetite, the EUR/USD reached a three-month peak at 1.1016 but failed to maintain its position above 1.1000 and pulled back. Inflation in Europe decelerated further during the third quarter, whereas the United States economy expanded even more robustly than was previously reported. The US dollar continues to be vulnerable in the wake of the data.

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The annual rate of inflation in Germany, as indicated by the Consumer Price Index (CPI), decreased from 3.8% in October to 3.2% in November, falling short of the market anticipation of 3.5%. The annual rate decelerated from 3.5% to 3.2% in Spain. Eurostat will disclose the Eurozone CPI on Thursday. The German retail sales and unemployment rate are also forthcoming.

If Eurozone inflation confirms what data from Spain and Germany have already indicated, it could fuel additional speculation regarding European Central Bank (ECB) rate cuts. Nevertheless, prior to adopting a definite dovish stance, ECB officials will likely require additional data, especially since economists caution that inflation is likely to recover within the following two months. Regardless, the ECB welcomes this development.

On both sides of the Atlantic, bond yields declined, with the most significant decline occurring in Germany, where the 10-year bond yield reached its lowest level since early August, falling to 2.43%.

Wednesday’s release of data indicated that the annualized growth rate of the US economy during the third quarter surpassed the previously estimated 4.9% to 5.2%. The figure bolstered the value of the US dollar by providing assurance regarding the health of the US economy. Nevertheless, subsequent reports in the Beige Book indicated a deceleration in economic activity during the pre-November 18 period.

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The weekly Jobless Claims and the Core Personal Consumption Expenditures Price Index are among the data that will be released in the United States on Thursday. Both reports are crucial and, if they indicate a further deceleration in inflation and a weakening labor market, could spark additional losses for the US dollar.


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