EUR/USD saw a modest recovery on Wednesday after dipping to its session lows, spurred by a surprise surge in U.S. Consumer Price Index (CPI) inflation. The pair tested lower levels throughout the day before rebounding, with the focus now shifting to Thursday’s U.S. Producer Price Index (PPI) inflation data. Meanwhile, European economic data takes a backseat this week.
The final Harmonized Index of Consumer Prices (HICP) data from Germany is scheduled for release on Thursday, but the non-preliminary figures are unlikely to generate much market volatility, as expectations are well-forecast and fully priced in. Headline German HICP inflation is expected to remain steady at 2.8% for the year ending in January.
In the U.S., January CPI inflation showed a notable increase, rising to 3.0% year-over-year, slightly above the anticipated 2.9%. The most significant contribution to this uptick came from the month-over-month figure, which jumped to 0.5%, surpassing the forecasted 0.3%. This unexpected increase in CPI has raised concerns about inflation becoming more entrenched in the U.S. economy.
On Thursday, attention will turn to core U.S. PPI inflation, with median market expectations calling for a slight dip to 3.3% year-over-year, down from 3.5%. However, the recent CPI rise has unsettled investors, amplifying concerns about persistent inflationary pressures in the U.S.
EUR/USD Technical Outlook
EUR/USD continues to exhibit volatility, trading just below the 50-day Exponential Moving Average (EMA) at 1.0425. The pair remains trapped beneath this key technical level, but short-sellers have struggled to build momentum, with a support floor near the 1.0300 level providing some stability. As a result, the pair is likely to remain range-bound unless a break occurs in either direction based on forthcoming inflation data.
Related topics:
Japan and U.S. Agree to Leave Currency Matters to Finance Ministers
Bitcoin Faces Pressure as Safe-Haven Assets Shine Amid Geopolitical Instability
Island Technology Inc. Raises Funds at $4.5 Billion Valuation Amid Cybersecurity Growth
