While the EUR/USD rate started the week poorly, it appears that it might rise with the release of CPI data. The currency pair managed to end Monday with no change. As of the beginning of Tuesday, you can buy dollars at around 1.08 against the euro.
However, investors may refrain from undermining the dollar due to the upcoming inflation data for November. Analysts are expecting relatively high inflation figures, which could keep the dollar strong as interest rates remain high.
The best dollar rate, therefore, failed to make significant headway as the week began. Part of this shift in price is attributed to the change in US Treasury yields. 10-year bonds decreased to around 4.29% after a recent bond auction, down from 4.51% in the previous auction. Naturally, this lowered bond yields in the market, putting pressure on the US dollar and increasing the buying power of the dollar.
The upcoming CPI data for November will also have implications. Analysts believe it will rise by 3.10% over the year, although this is lower than October’s 3.10%. Meanwhile, the core CPI is expected to remain around 4.00%.
Regarding the core CPI data, there are two scenarios. If it falls below expectations, it could weaken the US dollar. If it exceeds expectations, it would likely have a positive impact on the value of the Greenback. Many are hoping for a dovish strategy.
Against the euro, there are several technical indicators to consider when predicting future price movements. A resistance level is seen around 1.082, limiting further upward movement. However, if it manages to break through this level, there is a possibility of the pair reaching 1.087, if not 1.09, in the coming days. Therefore, the rate to buy dollars has the potential to increase substantially.
