Euro Breaks Above 1.1600 on Soft US CPI

The euro is currently being driven by US-side dynamics as key Eurozone data releases are behind us, and European Central Bank (ECB) communication has been subdued. According to ING's Francesco Pesole, a softer US Consumer Price Index (CPI) could trigger a break above 1.1600 against the US Dollar.

The next resistance level beyond 1.1600 is the 200-day moving average at 1.1630. Short-term rate differentials have been growing and remain the dominant driver for EUR/USD, making sensitivity to the Fed story very elevated.