EUR/USD Bulls Continue to Target $1.13 on Sticky Inflation Bets

Highlights

• The EUR/USD had a bullish start to the Tuesday session on hawkish ECB chatter.
• It is a quiet day on the European economic calendar, with no economic indicators to spook investors.
• However, US retail sales figures will be the focal point as investors erase bets on a September Fed rate hike but price in a soft landing.

It is a quiet day ahead for the EUR/USD. There are no economic indicators from the euro area to move the dial today.

However, ECB commentary will need consideration. ECB Executive Board Member Fabio Panetta is on the calendar to speak today with investors looking for post-summer forward guidance. Beyond the ECB calendar, investors should track comments with the media.

This week, ECB Executive Board Members Joachim Nagel and Bostjan Vasle talked about sticky inflation but remained uncommitted to a September move.

The US Session

It is a busy day on the US economic calendar. US retail sales, industrial production, and business inventories will be in focus. While industrial production and inventory numbers will draw interest, retail sales will be the focal point.

Economists forecast US retail sales to increase by 0.5% in June versus a 0.3% rise in May. While the numbers are unlikely to influence sentiment toward Fed monetary policy, upbeat numbers would further support the theory of a soft landing.

EUR/USD Price Action

Daily Chart

The Daily Chart showed the EUR/USD hold above the $1.12 psychological resistance level and the $1.1180 – $1.1221 resistance band to give the bulls a look at $1.13. A bullish start to the Tuesday session saw the EUR/USD test resistance at $1.1250 before easing back.

Looking at the EMAs, the EUR/USD sat above the 50-day ($1.09348) and 200-day ($1.07555) EMAs, signaling bullish momentum over the near and longer term.

Notably, the 50-day EMA pulled further away from the 200-day EMA and reflected bullish momentum.

Looking at the 14-Daily RSI, the 75.19 reading signaled the EUR/USD in overbought territory. However, the EMAs support a EUR/USD hold above the $1.1221 – $1.1180 resistance band and signal a breakout from $1.1250 to target $1.1300.

4-Hourly Chart

Looking at the 4-Hourly Chart, the EUR/USD sits above the $1.12 psychological level and the $1.1180 – $1.1221 resistance band.

The EUR/USD remains above the 50-day ($1.11040) and 200-day ($1.09521) EMAs, sending bullish near and longer-term signals.

Significantly, the 50-day EMA pulled further away from the 200-day EMA, signaling a run at $1.13.

The EUR/USD must avoid sub-$1.1200 to support a sustained breakout from the $1.1180 – $1.1221 resistance band to target $1.13. However, a fall to sub-$1.1200 would bring the 50-day EMA ($1.11040) and the $1.1060 – $1.1015 support band into view.

The 14-4H RSI at 77.55 shows the EUR/USD in overbought territory. However, the RSI aligns with the 50-day EMA, supporting a run at $1.13.