Technical Outlook: EUR/USD

Fundamental Outlook

During the Asia-Pacific session, the main event was the release of the RBA Meeting Minutes from their August 2 meeting. The minutes stated that "most recent data on prices and labour costs confirmed that domestic cost pressures had been subdued" with the RBA continuing to highlight concerns over a strong AUD.  Inflation is expected to remain at around 1.5% this year, however eventually potentially increasing to 2%.

During the London session, the main release was UK CPI which saw CPI y/y print at its highest level since November 2014 and consequently saw upside in GBP. Despite the UK's positive CPI release we would expect GBP to eventually once again come under pressure as the overall outlook for GBP remains extremely bearish. Given most GBP pairs are at extreme levels however and GBP's continued weakness of late, there is the risk of further profit taking and therefore a greater retracement in GBP pairs.

In today’s session, we expect the strongest currency to be EUR as EUR has remained well supported during today's London session with EURUSD breaking to fresh post 'Brexit' highs, set to test the 1.1300 handle.

The weakest currency is expected to be USD which has remained pressured throughout the London session. This has been attributed to the recent comments from Fed's Williams who stated that "central banks may need to increase inflation targets and there may be a call for new fiscal policies to boost US interest rates." US CPI which will be released during today's New York session does pose a major risk to our current view on USD, however, if CPI disappoints then we are likely to see an exacerbation of negative USD sentiment. US CPI could also provide an excellent catalyst to enter any USD trades.

The main event in today's New York session will be US CPI. We will also see the results of Fonterra's latest dairy auction with today's GDT Price Index and early in the Asia-Pacific session Employment data from New Zealand.

There are several levels including the current price level which can be considered for buying opportunities:

The price levels below could be used to buy from as price retraces into them:

1.1223, 1.1156, 1.1100

The price level below could be used to buy from as the price breaks out above:

113.00

Source: Jarratt Davis

Technical Outlook (EUR/USD Daily Chart)

Indicators: Bullish (50 sma above 200 sma)

Price action: Trading within a symmetrical triangle formation

Summary: I am expecting the price to pull back into the bottom channel of the triangle before breaking and moving up towards the critical resistance zone.