EUR/USD reamains pressured below 1.2100 post-US inflation PCE

• The US Core Personal Consumption Expenditure (PCE) price index rose 1.9% y/y in March matching analysts expectations.
• Earlier on Monday, German inflation came in below expectations further reinforcing the bearish euro’s case. 
• The bullish sentiment on the US dollar remains intact as market participants remain optimistic that the Fed will raise rates three to four times in 2018.

The EUR/USD is trading at around 1.2085 down 0.37% on Monday as the US inflation PCE matched analysts expectations.

The US core Personal Consumption Expenditure (PCE) matched analysts expectations rising 1.9% over the year to March, up from 1.6% y/y in February. This is below the Federal Reserve bank target of 2%, however, the data come in line with expectations. The EUR/USD had a small reaction up on the release while the US Dollar Index pulled back to the 91.80 region but the main bull trend in the US dollar remains in place.

Earlier in the day, the German inflation data with the Harmonized Index of Consumer Prices over the year to April fell to 1.4% below analysts expectations of 1.5% forecast. This negative reading doesn’t help the negative sentiment on the euro.

On the broader picture, the EUR/USD bearish sentiment has predominantly been driven by strong US dollar sentiment and lackluster recent Eurozone macroeconomic data. The US Dollar Index, which gauges the greenback relative to a basket of currencies is trading at 3.5-month highs boosted of late by surging US Treasury yields, encouraging US macroeconomic data and the prospect that the Federal Reserve Bank could hike rates three to four times in 2018. On the geopolitical front, the historical meeting between North and South Korean’s leader and talks of denuclearization bolster risk-on mood and the US dollar.

Coming next on the US data front are the Chicago Purchasing Managers Index, Pending Home Sales and the Dallas Fed Manufacturing Business Index (Apr)

EUR/USD 4-hour chart 

The trend is bearish. Immediate support is seen at 1.2054 swing low followed by the 1.2000 figure and 1.1915 swing low. To the upside, resistance is priced in at 1.2140 and 1.2210 swing highs.