The EUR/USD pair continues to gravitate around parity on Thursday. The pair gathered momentum after mixed U.S. data, which showed a modest increase in August Retail Sales but a sharp decrease in the Philadelphia Fed Manufacturing Index.
At the time of writing, the EUR/USD pair is trading just a couple of pips below 1.0000, up 0.18% on the day, after hitting a daily high of 1.0017 earlier in the session.
The U.S. Census Bureau of the U.S. released August Retail Sales data, which showed an increase of 0.3% after its previous reading of -0.4%. The reading beat the market consensus of 0.0%.
On the other hand, the market participants were surprised by the poor numbers of the Philadelphia Fed Manufacturing Index, which came in at -9.9 in the same period from the previous 6.2 printed in July, well below the expectations of 2.8.
At the same time, weekly Initial Jobless Claims resulted lower than forecasted at 213,000. As a reaction, the greenback came under moderate pressure. The DXY is hovering around the 109.50 area, virtually unchanged on the day.
In the meantime, several European Central Bank members were on the wires offering different perspectives. On Wednesday, Chief Economist Phillip Lane argued that the current inflation transition will require the ECB to continue to raise interest rates but that those future hikes would remain data-dependent.
At the same time, François Villeroy said the ECB could reach the neutral rate by the end of this year, around 2% in nominal terms, arguing that the bank needs to act in a determined but “orderly” way.
On Thursday, ECB’s VP Luis de Guindos delivered a more hawkish message emphasizing that the central bank’s most valuable asset is its credibility and that it becomes even more valuable in times of uncertainty.
He also stated that the ECB’s monetary policy needs to be focused on price stability. De Guindos called the bank to act “decisively” to control inflation and ensure its credibility isn’t lost.
From a technical perspective, the EUR/USD short-term outlook is neutral to slightly bearish, with indicators turning flat on the daily chart following several sessions of indecisive price action.
On the downside, the next support levels are seen at 0.9900 and the cycle low of 0.9863 ahead of the 0.9580 area, where the lower end of a descending channel traced from the February high stands.
On the other hand, above parity, the following resistance levels are seen at 1.0100 and the 1.0180 zone, where the upper side of the same channel arises as the last defense before 1.0200.