EUR/USD rises to test 1.1300, hits fresh 7-month highs

A sharp decline of the US dollar boosted the EUR/USD to the highest intraday level since November. Lower-than-expected inflation and retail sales data in the US pushed the greenback sharply to the downside and boosted Treasuries. 

The pair rose to test the 1.1300 handle. It reached 1.1295 and pulled back modestly. It is trading at 1.1275, considerably higher for the day and still near the 1.1300 zone. The US dollar remains under pressure across the board ahead of the FOMC statement and Yellen’s press conference. 

The CPI fell in May 0.1% and the annual rate stood at 1.9%, the lowest since November. Retail sales and sales excluding the autos both contracted 0.3%, against expectations of a modest increase. 

US CPI and retail sale provide more soft data

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The euro is trading again near a key level, that capped the upside during the last two week. A break and a consolidation on top could signal further gains ahead. While if it's rejected again, doubts about the sustainability of the current rally would rise. 

Levels to watch

To the upside, immediate resistance is the 1.1300 zone; above the next could be seen at 1.1355 and 1.1365 (Aug highs). On the downside, support could be located at 1.1270, 1.1230/35 (Jun 12 high) and 1.1195/1.1200 (daily low).