EURUSD close to a key trendline as the selling pressure accelerates after soft French CPI

The very soft French inflation figures released this morning are weighing on the euro as the market might be starting to look for a stronger divergence between the Fed and the ECB.

The ECB policymakers also continue to blame the stronger euro for the downside risks for inflation. This might eventually force them to cut more than expected while the Fed keeps rates higher for longer due to upside inflation risks as seen already in the latest US Flash PMIs.

On the 4 hour chart, we can see that the price is now approaching a key upward trendline that’s been defining the bullish momentum on this timeframe. The buyers are likely to lean on the trendline with a defined risk below it to position for another rally into new highs. The sellers, on the other hand, will look for a break lower to increase the bearish bets into the 1.1260 support zone next.

This article was written by Giuseppe Dellamotta at www.forexlive.com.