EUR/USD edged lower on Wednesday, reversing earlier gains as the US Dollar (USD) regained strength following the release of in-line US Consumer Price Index (CPI) data. At the time of writing, EUR/USD traded around 1.1521 after reaching an intraday high of 1.1563 [1]. The US Dollar initially weakened after the inflation report showed headline and core CPI easing to 3.4% and 2.5%, respectively, which led traders to scale back expectations for further Federal Reserve (Fed) rate hikes [1]. However, the Greenback later pared its losses, supported by elevated energy prices that keep inflation risks tilted to the upside, as well as ongoing geopolitical tensions and the reopening of the Strait of Hormuz, which bolstered safe-haven demand for the USD [1].
The US Dollar Index (DXY), which tracks the Greenback against a basket of six major currencies, traded close to the 100 psychological mark after rebounding from an intraday low of 99.61 [1]. This recovery in the US Dollar dragged EUR/USD toward the lower end of its recent range, following repeated rejections at the 100-day Simple Moving Average (SMA) [1].
From a technical perspective, EUR/USD maintains a neutral-to-slightly bullish bias, holding above the 1.1500 psychological mark and the 50-day SMA at 1.1466 [1]. The Relative Strength Index (RSI) stands near 56, and the Moving Average Convergence Divergence (MACD) remains in positive territory, though the fading green histogram indicates weakening bullish momentum [1]. The Average Directional Index (ADX) in the high 20s suggests moderate trend strength [1]. Immediate resistance is seen at the 100-day SMA at 1.1567, with the 200-day SMA near 1.1630 as the next level to watch if the pair breaks higher [1]. On the downside, support is at 1.1500, followed by the 50-day SMA at 1.1466; a break below these levels could expose the pair to a deeper pullback [1].
CONCLUSION
EUR/USD's recent gains have faded as the US Dollar rebounded on persistent inflation risks and safe-haven demand. The pair remains above key support levels, but weakening bullish momentum suggests caution among traders. Market participants are closely watching technical levels for further direction.