BUZZ-COMMENT-US inflation surprise leaves EUR/USD at risk of visiting 2022’s low

June 10 (Reuters) – EUR/USD fell on Friday, piercing the 50% Fibo of the 1.0349-1.0787 rally on its way to a 16-session low after a U.S. CPI report showed no signs of moderating inflation nAPN0MIUDS, with Fed policy expectations and global growth concerns likely to inspire further declines that could test this year’s low.

Investors drove U.S. rates EDM3, US2YT=RR sharply higher as they lifted their expectations for the terminal Fed rate FEDWATCH.

The more hawkish Fed view bolsters expectations that other major central banks will follow suit nL8N2XX0NSnL1N2XW1H9nL4N2XU19M, raising the probability of slower global growth, which the euro is typically positively correlated with.

Key barometers of global growth highlight the concerns. CPI data helped U.S. 2s-10s yield curve break key support and flatten sharply to levels not seen since early April.

Emerging market currencies weakened broadly against the dollar as higher rates have a greater negative impact on EM GDP. China’s yuan struck a 10-session low against the dollar due to growth concerns.

Falling daily and monthly RSIs, breaking the 50% and 61.8% Fib of 1.0349-1.0787 are tech signs that reinforce downside risks that could lead to a test of EUR/USD’s 2022 low struck in May.

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(Christopher Romano is a Reuters market analyst. The views expressed are his own)

((christopher.romano@thomsonreuters.com;))