EUR/USD steadies near 1.1700, eyes on US and Germany CPI data

• EUR/USD stays under modest bearish pressure on Wednesday.
• US Dollar Index rises for the fourth straight day.
• Focus shifts to inflation data from Germany and US.

After closing the seventh straight day in the negative territory, the EUR/USD pair extended its slide during the Asian trading hours and touched its lowest level since late March at 1.1700 before going into a consolidation phase. As of writing, the pair was posting small daily losses at 1.1710.

The unabated USD strength continues to weigh on EUR/USD. The US Dollar Index is currently trading at its strongest level in more than four months at 93.19, rising 0.13% on the day. 

Later in the session, Consumer Price Index (CPI) data from Germany and the US will be looked upon for fresh impetus. On a yearly basis, CPI in the US is expected to edge lower to 5.3% from 5.4%. Unless the print is much lower than expected, the greenback is likely to continue to outperform its rivals on the Fed's tapering prospects before the end of the year.

EUR/USD near-term outlook

Société Générale analysts think that EUR/USD could target 1.1600 with a break below 1.1700. “Support for EUR/USD below 1.1704 is at 1.1695. A deeper pullback towards 1.1600 beckons on a successful break," analysts explained. "A below-forecast number on US CPI today could elicit pockets of short-covering, only for the rally to be sold again."

EUR/USD to suffer a substantial drop to 1.16 on a slide below 1.17 – SocGen.

Additional levels to watch for