The demand for USD is still growing with the price of EURUSD reaching its lowest level since November 2020

EURUSD Analysis

In Germany, the annual CPI index increases by 3.8% – higher than in the previous period. However, the demand for USD is still growing with the price of EURUSD reaching its lowest level since November 2020.

In the mid-term, the first possibility is to continue the bearish trend. Currently, the price has reached the significant support of 1.1704, a level that hasn’t been reached for the past nine months and a decisive one depending on the price reaction. In the short term, there is a possibility of corrective fluctuations in this range, still, if the price crosses this range with confidence the first possibility is to continue the Bearish trend in the mid-term.

The monthly US CPI will be announced today, which could also affect the price trend of the EUR against USD, given the impact on the Federal Reserve’s decision on the future of expansionary monetary policy. The index is forecast to rise by 0.4% from the previous month, which shows a lower slope than the last period, but is still bullish. If the declared number is more than 0.4 percent, it could increase demand for the USD.

The CPI indicators, along with the NFP and unemployment rate, are the Fed’s most important indicators for future expansionary policy decisions. The rapid rise in inflation, along with the improvement in occupancy, could persuade the Fed to reduce its purchasing plans. Therefore, put reduce expansionary monetary policies on the agenda at forthcoming meetings.