EUR/USD continues under pressure after failing to defend the 2020 low (1.0340), and recent price action increases the scope for a additional decline in the exchange rate as it extends the series of lower highs and lows from last week.
The bearish price action in EUR/USD may persist until the RSI climbs above 30 to offer a textbook buy signal, and fresh data prints coming out of the US may push the exchange rate to fresh yearly lows as the Consumer Price Index (CPI) is expected to increase for ten consecutive months.
The headline CPI reading is projected to hit 8.8% in June after expanding 8.6% per annum the month prior, and evidence of persistent price growth may trigger a bullish reaction in the US Dollar as it puts pressure on the Federal Reserve to step up its effort in combating inflation.
Nevertheless, a slowdown in the core CPI may produce mixed reactions as the Federal Open Market Committee (FOMC) shows little interest in implementing a 100bp rate hike, and Chairman Jerome Powell and Co. may retain the current path for monetary policy at the next interest rate decision on July 27 as the central bank appears to be on track to deliver another 75bp rate hike.
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