EUR/USD dips back into 1.0530 as post-US CPI inflation fears grip investor sentiment

• EUR/USD sees a sharp decline for Tuesday, dropping over 1% peak-to-trough.
• Fed fears are back on the table as inflation takes a bite out of market hopes for faster rate cuts.
• The Euro is trading back into the low end for the week after investors scrambled for the US Dollar safe haven.

The EUR/USD started Thursday near 1.0620 after making steady gains through most of the week, but a bumper beat for the US Consumer Price Index (CPI) saw investors turn-tail and head for the safe haven hills, piling into the US Dollar (USD) and sending the Euro (EUR) back into familiar lows for the week.

The EUR/USD heads into the Friday market session trading near 1.0530.

US CPI inflation holds steady at 3.7% in September vs. 3.6% forecast

The US CPI inflation print failed to decline in accordance with market forecasts, and sticky inflation is elevating market concerns that the Federal Reserve (Fed) could see rate cuts pushed even further out into the future.

With one more rate hike on the books for 2023, markets are struggling to find reasons to stick with broad forecasts for a half-point rate cut from the Fed by the midpoint of 2024.

Forex Today: Dollar remains weak despite PPI and FOMC Minutes, CPI Next

Friday brings EU Industrial Production figures due at 09:00 GMT, and investors will be looking ahead to a public appearance by the European Central Bank (ECB) President Christine Lagarde.

EU Industrial Production for August is expected to rebound to a scant 0.1% from the previous month's -1.1% printing, but market effect is likely to remain limited as investors look out for comments from ECB President Lagarde.

President Lagarde will be taking part in a panel discussion titled "Debate on the Global Economy" during a seminar at the World Bank Group and International Monetary Fund annual meeting currently underway in Morocco. Traders will be keeping an ear out for any indications from ECB head Largade regarding the ECB's stance on interest rates for the EU looking forward.

EUR/USD Technical Outlook

The Euro tumbled over a full percentage point on Thursday, sagging into 1.0530 and slipping past the 200-hour Simple Moving Average (SMA) currently flat near 1.0545.

The EUR/USD is now in the red for the trading week, down 0.35% or just under 40 pips from Monday's opening bids.

On the daily candlesticks, the EUR/USD's bearish Thursday session sees the pair facing a clean rejection of the descending trendline from July's peak at 1.1275, and price action continues to lean firmly bearish in the medium-term with the 50-day SMA confirming a bearish cross of the 200-day SMA, with the moving averages at 1.0730 and 1.0825 respectively.

EUR/USD Hourly Chart

EUR/USD Daily Chart

EUR/USD Technical Levels