Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0810.
- Add a stop-loss at 1.1000.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1000.
- Add a stop-loss at 1.0800.
The EUR/USD exchange rate rose to the highest level since November 5 and then pulled back slightly as the market reacted to the encouraging US consumer inflation data. It initially rose to 1.0935 and then retreated to a low of 1.0885.
US inflation eased before tariffs
The EUR/USD exchange rate rose to a bigh of 1.0935 and then retreated after the latest US inflation data showed that prices eased ahead of Donald Trump’s tariffs.
The headline consumer price index dropped from 0.5% in January to 0.2% in February. Economists were expecting the data to show that the headline CPI rose to 0.3%.
This improvement translated to an annual rate of 2.8%, lower than the median estimate of 2.9%.
Core inflation, which excludes the volatile food and energy products, dropped from 3.3% to 3.1%.
These numbers mean that the country’s inflation was moving in the right direction. This trajectory may start to change in the coming months as companies start to apply the recently announced tariffs to their pricing.
The US inflation data came a week before the Federal Reserve makes its March interest rate decision. Analysts anticipate the bank to leave rates unchanged and provide direction on when it will start cutting rates.
The EUR/USD pair wavered as the market reacted to Donald Trump’s tariffs on European steel and aluminum. The European Union retaliated against these measures by adding tariffs on US goods worth over $28 billion. Trump vowed to retaliate against the EU’s cuntermeasures, which will accelerate the trade war.
Looking ahead, the next key data to watch will be the upcoming US producer price index (PPI) and initial jobless claims data.
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EUR/USD technical analysis
The EUR/USD exchange rate rose to a high of 1.0935, the highest level since November 2. It has jumped by over 7% from its lowest level this year.
The pair has remained above the 61.8% Fibonacci Retracement level. It has also moved above all moving averages, a sign that bulls are in control for now.
The pair has moved slightly above the third resistance level of the Woodie pivot point level. Therefore, while the uptrend will likely continue, the pair may drop slightly and retest the 61.8% Fibonacci Retracement level at 1.0810. More upside will be confirmed if the pair rises above the key resistance point at 1.0935.
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