The Euro is trading nearly flat on Thursday as investors assessed the impact of this week’s U.S. jobless claims and July Producer Price data.

Prices rose the previous session after U.S. core consumer inflation data came in lower than expected, dampening the chances of an early tapering by the Federal Reserve. This news drove down U.S. Treasury yields and weakened the U.S. Dollar.

At 13:04 GMT, the EUR/USD is trading 1.1738, down 0.0003 or -0.02%.

In economic data, initial jobless claims declined for the third consecutive week as the U.S. labor market continues its recovery from last year’s recession.

There were 375,000 claims last week, matching estimates from economists surveyed by Dow Jones, the Labor Department said on Thursday. The prior reading was revised upward by 2,000 to 387,000 claims.

U.S. producer prices increased more than expected in June, a separate Labor Department report showed on Friday, suggesting inflation could remain high as strong demand fueled by the recovery continues to hurt supply chains.

The producer price index for final demand increased 1.0% last month after rising 1.0% in June. In the 12 months through July, the PPI jumped 7.8%.

Daily EUR/USDDaily Swing Chart Technical Analysis

The main trend is down according to the daily swing chart. However, Wednesday’s closing price reversal bottom suggests momentum may be getting ready to shift to the upside. A trade through 1.1706 will negate the closing price reversal bottom and signal a resumption of the downtrend.

Taking out 1.1753 will confirm the closing price reversal bottom. This will shift momentum to the upside. This won’t change the main trend to up, but it could trigger a 2 to 3 day rally into 1.1808 to 1.1831.

Daily Swing Chart Technical Forecast

The direction of the EUR/USD on Thursday is likely to be determined by trader reaction to 1.1753.

Bearish Scenario

A sustained move under 1.1753 will indicate the presence of sellers. If this move creates enough downside momentum then look for the selling to possibly extend into 1.1706 to 1.1704.

Story continues

The main bottom at 1.1704 is also a potential trigger point for an acceleration to the downside with 1.1603 the next potential downside target.

Bullish Scenario

A sustained move over 1.1753 will signal the presence of buyers. The daily chart indicates there is no major resistance until 1.1808. Therefore, watch for the start of a 2 to 3 day rally with this level the next potential upside target.

For a look at all of today’s economic events, check out our economic calendar.

This article was originally posted on FX Empire


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