Analysis of the EUR/USD exchange rate: declines below 1.10176 on concerns about US inflation

In the Tokyo session, the EUR/USD pair tested territory below the psychological support of 1.10176. In anticipation of the US inflation data, the main currency pair is anticipated to exhibit additional weakness as the US Dollar Index (DXY) targets more upside over the immediate resistance level of 101.50.

The EUR/USD exchange rate has fallen below 1.10176 as the USD Index seeks more gains. Because retail demand is steadily dropping, the Eurozone economy is on the verge of entering a recession. After touching its yearly high of 1.1096 again, the EUR/USD is displaying symptoms of a major decline in the upward momentum.

According to the initial estimate, US inflation is anticipated to be stable. It appears that increased family income has countered decreasing commercial bank loans due to poor demand and restrictive credit conditions.

In the meanwhile, as retail demand continues to fall and the growth rate has been severely constrained by rising interest rates from the European Central Bank (ECB), the Eurozone economy is rapidly nearing recession.

After touching its yearly high of 1.1096 again, the EUR/USD is displaying signs suggesting a major decline in the upward momentum. The common currency pair is having difficulty keeping its price above the horizontal resistance line drawn from the high of February 02 at 1.1033. The Euro is being supported by the 20-period Exponential Moving Average (EMA) around 1.0983.

The Relative Strength Index (RSI) (14) oscillates between 40.00 and 60.00, which indicates poor performance in the future.

If the asset drops below the May 02 low at 1.0942, the US Dollar will continue to the downside, pushing the asset below the lows of April 12 at 1.0915 and April 10 at 1.0837.

The asset will instead rise toward a new 13-month high at 1.1185 and then the round-level resistance at 1.1200 if a recovery move moves over the high from April 26 at 1.1095.

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