Although producer prices in the euro area did not fall as much as expected, that is, it dropped to -7.6% instead of -7.8%, this is still quite a lot. And given the obvious delay in the impact of this factor on inflation itself, it is quite obvious that in the near future the growth rate of consumer prices will begin to actively decline. As a result, the European Central Bank will clearly pursue more and more prudent monetary policy. To the point that, perhaps, there will be no more interest rate hikes at all. So it is not surprising that the single currency fell.
So today, EUR/USD may return to the values at which it was at the very beginning of Tuesday's trading. The reason will be the retail sales data, its rate of decline will likely slow down from -1.4% to -1.1%. Although this still represents a decline in consumer activity, which is the engine of economic growth, given the clear oversold condition of the euro, even a slight improvement in the situation could provide a good reason for a small rebound. For this reason alone, the most plausible scenario would be for the euro to rise.
The EUR/USD pair extended the current downward cycle. As a result, the exchange rate has almost reached the value of 1.0700, a level from June.
On the four-hour chart, the RSI shows a signal of the euro's oversold conditions.
On the same chart, the Alligator's MAs are headed downwards, which corresponds to the price direction.
OutlookConsidering the extent of the euro's weakness, we can assume that the medium-term trend could change if the downward movement persists. However, 1.0650/1.0700 is an important support area for the bears, which has previously acted as a catalyst for an increase in long positions in the euro. Therefore, as long as the pair doesn't breach this area, the price may still rebound.
The complex indicator analysis points to a downward cycle in the short-term and intraday periods.