EUR/USD Forex Signal: Ahead of the US Retail Sales, PPI Data

The EUR/USD price has been in a strong bullish trend in the past few days.

Bullish view

  • Buy the EUR/USD pair and set a take-profit at 1.0800.
  • Add a stop-loss at 1.0695.
  • Timeline: 1-2 days.

Bearish view

  • Set a sell-stop at 1.0695 and a take-profit at 1.0600.
  • Add a take-profit at 1.0765.

The EUR/USD exchange was consolidating on Wednesday as traders assessed the impact of the latest consumer price index (CPI) data. It was trading at 1.0732, which was much higher than this month’s low of 1.0522.

US PPI data and ECB decision

The EUR/USD price wavered after the latest US consumer inflation data. Data published on Tuesday showed that the headline consumer price index (CPI) pulled back slightly in February. Annual inflation retreated to about 6%, which is above the Federal Reserve target of 2.0%.

However, core inflation rose from 0.4% to 0.5% on an MoM basis. Therefore, there is a likelihood that the Fed will continue rising interest rates in its upcoming meeting. Fed futures point to a 0.25% rate hike as it focuses on its fight against inflation.

The US will publish more inflation and retail sales numbers on Wednesday. The core producer price index is expected to come in at 0.3% from the previous 0.7%. Core PPI is expected to have dropped from 0.5% to 0.4%. These numbers will likely have a muted impact on the EUR/USD pair.

The US will also publish the latest retail sales numbers. Economists expect the data to show that retail sales plunged by 0.3% after rising by 3% in January.

The other important catalyst for the EUR/USD pair will be the latest inflation data from France and Euro area industrial production data. While these numbers are important, their impact on the EUR/USD price will be limited.

Instead, traders will be focusing on the upcoming interest rate decision by the European Central Bank (ECB). Economists believe that the ECB will attempt to balance the need to lower inflation with financial stability risks. As such, it will likely hike rates by 0.25% instead of the previously guided 0.50%.

EUR/USD technical analysis

The EUR/USD price has been in a strong bullish trend in the past few days. As it rose, the pair moved above the key resistance level of 1.0695, the highest point on March 1 and March 7. The 25-period and 50-period moving averages have made a bullish crossover while the Average Directional Index (ADX) has moved above 30.

The pair has moved to the first resistance of the Woodie pivot point. Therefore, there is still more upside as buyers target the second resistance point at 1.0800.


Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.