EURUSD Price Analysis Bulls on steroids as Fed’s rate hike in July to be last nail in coffin

EUR/USD has demonstrated a stellar run to near 1.1150 amid an intense sell-off in the USD Index.
After a soft US inflation report, hopes for only one interest rate hike this year by the Fed have improved.
EUR/USD is gathering strength for delivering a breakout of the slightly rising channel pattern.

The EUR/USD pair is consistently moving north with sheer momentum as soft United States Consumer Price Index (CPI) data drummed that only one interest rate hike option has left in the toolkit of the Federal Reserve (Fed) by year-end. The major currency pair has climbed to near 1.1150 as the US Dollar Index (DXY) is facing winter and the market mood is quite cheerful.

US monthly headline and core inflation registered a moderate pace of 0.2% in June along with a significant decline in annualized numbers due to falling prices of second-hand motor vehicles. The US Dollar Index (DXY) has shown a vertical fall to near 101.40 and is expected to continue its downside momentum.

Meanwhile, the European Central Bank (ECB) is expected to raise interest rates further to tame stubborn inflation. ECB President Christine Lagarde has already made clear that more interest rates are appropriate.

EUR/USD is gathering strength for delivering a breakout of the slightly rising channel formed on a daily scale. The upper portion of the aforementioned chart pattern is placed from February 03 high at 1.1033 while the lower portion is plotted from March 15 low at 1.0516. Potential resistance is placed from 14 January 2022 high at 1.1483.

Upward-sloping 20-period Exponential Moving Average (EMA) at 1.0947 indicates that the short-term trend is bullish.

The Relative Strength Index (RSI) (14) has jumped into the bullish range of 60.00-80.00, which indicates that the upside momentum has been activated.

For further upside, a decisive break above the round-level resistance of 1.1200 would expose the asset to 01 March 2022 high at 1.1233 followed by 25 February 2022 high at 1.1271.

In an alternate scenario, a downside move below February 03 high at 1.1033 would expose the asset to the psychological support of 1.1000. Further slippage below the psychological support would drag the major currency pair to June 15 high at 1.0953.