EUR/USD has failed to hold above 1.09 following Monday's recovery. A four-hour close below 1.0860 could open the door for additional losses, FXStreet’s Eren Sengezer reports.

CPI inflation in the US is expected to jump to 8.5% in March

“The US Bureau of Labor Statistics will release the March inflation report. The Consumer Price Index (CPI) is expected to jump to a fresh multi-decade high of 8.5% in March. A stronger-than-expected CPI print could open the door for another leg higher in the US Dollar Index (DXY). On the other hand, a soft inflation reading could trigger a correction in the DXY and help EUR/USD limit its losses.”

“1.0860 aligns as key support for EUR/USD. Although the pair dropped below this level last week and early Tuesday, it failed to make a four-hour close below it. If this support fails, 1.0835 (April 8 low) could be seen as interim support ahead of 1.08 (psychological level).”

“On the upside, 1.09 (psychological level) forms the first hurdle before 1.0940 (Fibonacci 23.6% retracement of the latest downtrend, 50-period SMA on the four-hour chart) and 1.0980 (Fibonacci 38.2% retracement, 100-period SMA).”

See – US CPI Preview: Forecasts from 12 major banks, another lurch forward