EUR/USD struggles to rise above 1.19 despite USD weakness

Following a quick drop to a fresh weekly low at 1.1840 in the early NA session, the EUR/USD pair was able to retrace its losses but struggled to break above the 1.19 mark. As of writing, the pair was trading at 1.1884, flat on the day.

Although the US Dollar Index made a quick leap to a 10-day peak at 92.66 after the data from the U.S. revealed that the consumer inflation rose more than expected in August, it failed to extend its gains as the negative tone surrounding the US Treasury-bond yields weighed on the greenback. As of writing, the US Dollar Index was at 92.30, losing 0.1% on the day. 

• US: CPI for all items rises 0.4% in August as shelter and gasoline indexes increase
• CME Group FedWatch's Dec hike probability rose above 50% on CPI
• US: Weekly initial claims was 284,000, a decrease of 14,000 from previous week

On the other hand, despite the greenback weakness, the pair is having a tough time gaining traction. Recent remarks by the Bank of England (BOE) Governor Mark Carney pushed the EUR/GBP pair to its lowest level since late July. Carney said that the possibility of a rate hike had increased and he was looking to make a modest adjustment in interest rates. On a daily basis, the EUR/GBP pair is now losing more than 100 pips, keeping the demand for the shared currency in check.

Tomorrow's economic calendar will be featuring trade balance figures from the EU ahead of the retail sales and industrial production data from the U.S., which are unlikely to produce sharp price fluctuations.

Technical outlook

The pair's sharp drop found support at 1.1840, where the trend line coming from April is located, suggesting that 5-month-long uptrend is still intact. A break below that level could open the door for further losses towards 1.1730 (Aug. 21 low) and 1.1660 (Aug. 17 low). On the upside, resistances align at 1.1925 (20-DMA), 1.2000 (psychological level) and 1.2090 (Sep. 8 high).

• EUR/USD: a test of 1.2168 is not ruled out – Commerzbank