US news were far from supporting a September rate hike, with July CPI missing expectations and a concerned FED. Inflation in the country rose 0.1% against previous 0.3%, whilst the annual rate edged steady at 0.2%.
Later on in the day, the Minutes from the latest FED meeting showed that policymakers are still concerned about lagging inflation, and a stronger dollar.
Additionally, most of the FOMC members agreed that “the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point.” All in one, chances for a September rate hike have reduced, and the USD is paying the price, sharply lower across the board.
In Europe, and following a teleconference call, the European Stability Mechanism board agreed the program for the €86bn bailout package to Greece. Eurogroup president Jeroen Dijsselbloem said that “The program for the coming three years goes with strict conditions aiming at setting right public finances and administration and dealing with the economy and problems in the financial sector”.
The EUR/USD pair posted a daily low of 1.1017 right after the release of the US inflation readings, from where the bounce began, and accelerated with the release of the US Central Bank Minutes. The pair soared up to 1.1127, finding short term selling interest around a key Fibonacci resistance, the 23.6% retracement of the bullish August run between 1.0847 and 1.1213, at 1.1130.
The 1 hour chart shows that the technical indicators are losing their upward strength near overbought levels, but that the price stands above its moving averages, with the 100 SMA acting as immediate support around 1.1080.
In the 4 hours chart, the price has accelerated above its 20 SMA whilst the technical indicators head higher after crossing their mid-lines towards the upside, supporting some additional gains, in the case the pair breaks above the 1.1130 resistance.