The dollar is in a particularly vulnerable state right now and there are a couple of key technical developments playing out. In the case of EUR/USD, the pair is finding momentum to push back above 1.1000 again this week but now faces key resistance from the April to May highs around 1.1075-95 next:
EUR/USD daily chart
It will require validation/confirmation from the US CPI data later for buyers to try and make a breakthrough. And if there is one, that will set off the next leg lower in the dollar.
The more immediate resistance level next will come closer to 1.1200 with the 200-week moving average also sitting at 1.1180 currently.
But if the dollar can take heart from the inflation numbers later, a fall back below 1.1000 will perhaps give sellers some encouragement in the sessions ahead. That said, considering the recent flows, the balance of risks seem to favour dollar selling more and I wouldn’t be surprised that even with a softer set of inflation numbers, we could still run into offers on the dollar in the latter stages this week.