EUR/USD consolidates daily losses below 1.18, tax vote eyed
- Eurozone inflation data meets market expectations on Thursday.
- DXY loses momentum ahead of 94, remains in the positive territory.
- House Republicans are set to vote on tax bill later in the session.
Following its 200-pip rally during the first half of the week, the EUR/USD went into a consolidation phase late Wednesday and stayed in a tight range below the 1.18 mark on Thursday. As of writing, the pair was trading at 1.1770, losing 0.2% on the day.
Core CPI declines in Europe despite rising oil prices
Earlier in the day, the data from the euro area revealed that the inflation measured by the core-CPI declined by 0.1% on a monthly basis in October, pulling the annual rate down to 0.9% from 1.1%. However, the market reaction was virtually non-existent as the figures came in line with the market estimates. Commenting on today's data, Frank Smets, a member of the ECB’s policy-making council, said that the low Inflation was not worrying and they needed to be patient. In the meantime, speaking at an event in Amsterdam, the European Central Bank policymaker Francois Villeroy de Galhau said that the ECB would follow a path of gradual normalization.
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On the other hand, according to the data released by the U.S. Department of Labor, initial weekly jobless claims in the U.S. increased by 10K to 249K for the week ending November 11. On a positive note, industrial production in the U.S. expanded by 0.9% in October and surpassed the market expectation of 0.5%. Following the mixed data, the US Dollar Index fluctuated below the 94 mark as investors remained hesitant to commit to the greenback amid the uncertainty surrounding the tax bill. At the moment, the index is at 93.75, up 0.03% on the day.
The latest headlines suggest that the Republican House will begin voting on the tax bill around 18:00 GMT. A failure to receive enough votes to pass the bill is likely to weigh on the greenback.
Technical outlook
Valeria Bednarik, Chief Analyst at FXStreet, writes, "the 4 hours chart shows that technical indicators are losing bearish strength after correcting overbought conditions, stabilizing well above their mid-lines, as the price stands well above all of its moving averages. The 20 SMA heads north after crossing above the larger ones, now converging with the 38.2% retracement of the mentioned advance around 1.1745, making of the level a key support for the upcoming sessions. Below it, the dollar could extend its gains towards the 1.1690/1.1700 region, while below this last the 1.1650 price zone comes next. A steady recovery above 1.1800 on the other hand, should lead to a retest of the 1.1860 high, en route to 1.1890."
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