EUR/USD tumbles to lows post-EMU CPI, near 1.1730

The single currency has reverted the initial optimism and is now forcing EUR/USD to test the lower bound of the range near 1.1730.

EUR/USD muted on data

Spot posted no reaction after final CPI prints in the euro area showed inflation figures matching their preliminary readings. In fact, headline consumer prices rose at a final 1.3% and contracted 0.5% on a monthly basis. The CPI excluding food and energy costs rose 1.2% over the last twelve months, a tad higher than June’s 1.1% advance.

The pair has faded yesterday’s advance after the FOMC minutes came in on the dovish side, showing members remain pretty divided regarding the prospects of inflation, while there appears to be general consensus that the Fed should start reducing its balance sheet any time ‘soon’.

Later in the NA session, the usual report on the labour market is next on tap seconded by the Philly Fed manufacturing gauge, industrial production and capacity utilization.

In addition, Dallas Fed R.Kaplan (voter, hawkish) and Minneapolis Fed N.Kashkari (voter, dovish) are due to speak.

EUR/USD levels to watch

At the moment, the pair is retreating 0.26% at 1.1735 facing the immediate support at 1.1688 (low Aug.15) seconded by 1.1611 (low Jul.26) and finally 1.1577 (4-month up trend). On the other hand, a breakout of 1.1790 (high Aug.17) would target 1.1846 (high Aug.11) en route to 1.1894 (high Aug.3).