The EURUSD exchange rate rose on Thursday, with U.S. data taking precedence over news of Russian drones entering Poland’s airspace.
EURUSD – Daily Chart
The price of EURUSD has some overhead resistance ahead of the key 1.1800 level. The downside support is clustered above the 1.1570 level from April.
The euro was boosted by lower expectations for further interest rate cuts, with the European Central Bank leaving interest rates unchanged on Thursday as expected.
Meanwhile, U.S. consumer price data rose more than expected in August, while the annual increase in inflation was the largest in seven months. The Consumer Price Index increased 0.4% in August, after a 0.2% increase in July, according to the Labor Department.
“The CPI didn’t come in as high as the market expected. Ultimately, the biggest concern is that the dovishness that comes with the weak jobs numbers is going to be unwound if CPI accelerates more than expected,” Eugene Epstein at Moneycorp told Reuters.
“But that didn’t really materialize. Everybody would prefer CPI to be softer, but the point is, the data does not really change the course or move the needle for Fed rates”.
Jobs data showed claims for unemployment benefits jumped by 27,000 to a seasonally adjusted 263,000 for the week. Economists polled by Reuters had forecast 235,000 claims for the latest week.
It was the first reading in a long time that CPI has taken a backseat to other data. That dynamic will mean that the Federal Reserve are likely to remain on track for a 25 basis point September rate cut next week.
The euro has also shrugged off news that Russian drones had flown into Poland’s airspace. That risks a wider war for the region and could see a dollar haven move if it escalates.
