📊 Exclusive Analysis by DailyForex.PK
The EUR/USD pair has staged a recovery above the 1.0400 level, snapping a three-day losing streak as the US Dollar (USD) weakens following aligning US inflation data. However, with the Eurozone HICP inflation data due later today and an ECB policy decision on the horizon, market volatility remains elevated.
📌 Key Takeaways:
✅ EUR/USD recovers to 1.0410 after three consecutive losses.
✅ US PCE inflation data aligns with expectations, reducing fears of an inflation spike.
✅ US-China trade tensions could limit USD losses as tariffs are set to increase.
✅ Eurozone HICP inflation data remains in focus ahead of the ECB’s rate decision on Thursday.
✅ US Treasury yields rise, helping to support the Greenback in the near term.
📈 EUR/USD Technical Analysis
The EUR/USD pair has rebounded toward 1.0410 during the Asian session, fueled by a softer US Dollar Index (DXY). The DXY, which measures the USD against a basket of major currencies, has weakened after three consecutive days of gains, currently hovering around 107.30.
🔹 Immediate Resistance: 1.0455 (200-day EMA)
🔹 Key Support: 1.0380 (Psychological Level)
🔹 Momentum Indicator: RSI remains neutral at 49, signaling uncertainty.
💡 A decisive move above 1.0455 could open the door for 1.0500, while a break below 1.0380 may push EUR/USD toward the next major support at 1.0300.
📊 US Dollar Fundamentals – Weaker PCE Data Caps Gains
The US Personal Consumption Expenditures (PCE) inflation report, the Federal Reserve’s preferred gauge for price stability, showed no surprises:
📌 Headline PCE (MoM): 0.3% (unchanged from December)
📌 Core PCE (YoY): 2.6% (slightly lower than the previous 2.9%)
The stable inflation reading has reduced fears of unexpected rate hikes by the Federal Reserve, pressuring the US Dollar lower. However, rising US Treasury yields are preventing a deeper USD correction:
📈 US 2-year yield: 4.02% (marginally higher)
📈 US 10-year yield: 4.24% (supporting the USD near-term)
🌍 Global Factors Impacting EUR/USD
📌 US-China Trade War Escalation 🚨
🔺 Trump’s tariffs:
➡️ A 10% tariff increase on Chinese imports kicks in Tuesday.
➡️ Canada and Mexico will face 25% tariffs from March 4.
💡 This could trigger risk aversion, benefiting the USD as a safe haven and capping EUR/USD upside.
🇪🇺 Eurozone HICP Inflation & ECB Rate Outlook
The Euro gained ground on Friday after Germany’s HICP inflation data came in hotter than expected, signaling persistent price pressures:
📌 German HICP (YoY): 3.0% (vs. expected 2.8%)
🔍 What’s Next?
➡️ Eurozone HICP inflation is expected to show a slight uptick, potentially influencing the ECB’s stance.
➡️ ECB decision (Thursday): Markets expect the ECB to maintain a dovish tone, keeping easing expectations intact.
💡 If inflation surprises to the upside, the ECB may hold off on aggressive rate cuts, strengthening the EUR.
🔮 EUR/USD Forecast – Key Levels to Watch
✅ Bullish Scenario: A break above 1.0455 could push the pair toward 1.0500, supported by hawkish ECB expectations.
❌ Bearish Scenario: A drop below 1.0380 could see the pair testing 1.0300 if USD demand rises.
🔎 Traders should watch today’s Eurozone inflation report and US-China trade developments for directional cues.
🎯 Conclusion
✔️ EUR/USD has rebounded above 1.0400, but upside remains limited due to ongoing US-China tariff concerns.
✔️ Eurozone HICP inflation & ECB policy will be crucial in setting the next major trend.
✔️ US Treasury yields & risk sentiment will dictate short-term price action.
📢 Stay tuned for live market updates on DailyForex.PK! 🚀