• German annual inflation slowed sharply in March but still elevated.
  • Eurozone CPI and US inflation PCE on Friday.
  • EUR/USD reaffirms positive outlook, challenges ahead.

The EUR/USD climbed above 1.0900 on Thursday following Eurozone inflation data, amid a rally in Wall Street and ahead of more inflation numbers. The pair posted the highest daily close since early February, reaffirming the bullish outlook.

German Consumer Price Index (CPI) eased from 8.7% YoY in February to 7.4% in March, above 7.3% of market expectations. The rate reached its lowest level since August 2022 due to natural gas cost tumbling compared to a year ago when prices surged after Russia invaded Ukraine. Despite the slowdown, German inflation remains above European Central Bank’s (ECB) target. Spain reported that the CPI dropped from 6% YoY to 3.3%, but core inflation slowed marginally, showing price pressures are still out there.

The German 10-year bund yield jumped after the data to 2.35%, the highest level in a week, boosting the Euro across the board. On American hours, the Euro trimmed gains and then, EUR/USD stabilized around 1.0900.

More inflation data will be released on Friday, with the Eurozone preliminary March Harmonized CPI expected to show a decline in the annual rate from 8.5% to 7.1%, mostly due to base effects.

Some Federal Reserve officials hit the wires on Thursday. The tone of the messages is that interest rates could rise further if inflation persists, and rate cuts for later in the year are off the table for the moment. Markets still see some possibilities for rate cuts, assuming a hard landing of the economy ahead, but as the banking crisis eases, the potential impact on activity economy fades.

The US Core Personal Consumption Expenditure Price Index will be released on Friday. That inflation indicator, closely watched by the Fed, will be critical for expectations about the path of the Fed’s policy.

EUR/USD short-term technical outlook

The EUR/USD is challenging the 1.0900 area again after retreating from the resistance area of 1.0925/30. While above 1.0900, another test of the recent top seems likely. Above, there is not much resistance until 1.0990.

The 4-hour chart shows EUR/USD firm above key moving averages, with the 20-period SMA at 1.0840. The positive momentum will remain strong while above 1.0840/50. However, the RSI is at 70 (overbought), signalling some consolidation could be ahead.

View Live Chart for the EUR/USD

 

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended Content


Recommended Content

Editors’ Picks

GBP/USD holds recovery gains above 1.2900 ahead of BoE policy decision

GBP/USD holds recovery gains above 1.2900 ahead of BoE policy decision

GBP/USD builds its recovery momentum above 1.2900 in European trading on Thursday, moving away from its lowest level since mid-August. Traders adjust their positions ahead of the key BoE and Fed monetary policy announcements. 

GBP/USD News
EUR/USD stays firm near 1.0750 amid US Dollar pullback

EUR/USD stays firm near 1.0750 amid US Dollar pullback

EUR/USD holds higher ground near 1.0750 in the European session on Thursday. The pair finds support from a broad US Dollar retreat, as traders unwind their Trunp win-inspired USD longs ahead of all-important Fed policy announcements. 

EUR/USD News
Gold price faces challenges due to decline in safe-haven flows, awaits Fed rate decision

Gold price faces challenges due to decline in safe-haven flows, awaits Fed rate decision

Gold price (XAU/USD) faced challenges as the dollar-denominated precious metals struggled due to a stronger US Dollar (USD) following the victory of former President Donald Trump in the US election.

Gold News
BoE set for a second interest rate cut this year on Thursday

BoE set for a second interest rate cut this year on Thursday

Market consensus points to further easing by the Bank of England's (BoE) upcoming interest rate decision on Thursday. The BoE has held rates steady at 5.00% in the previous gathering, but shifting investor sentiment now suggests a possible 25-basis-point cut this week.

Read more
Trump wins: Tax cuts come with a cost

Trump wins: Tax cuts come with a cost

Donald Trump’s victory will ensure a lower tax environment that should boost sentiment and spending in the near term. However, promised tariffs, immigration controls and higher borrowing costs will increasingly become headwinds through his presidential term.

Read more
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

Majors

Cryptocurrencies

Signatures