- EUR/USD is rising for the fourth straight day.
- US Dollar Index edges lower after CPI data from US.
- ECB’s Lagarde says ECB can scale up PEPP if needed.
The EUR/USD pair trading in a relatively tight range above 1.2100 but remains on track to close the fourth straight day in the positive territory. As of writing, the pair was up 0.15% at 1.2133.
The inflation report published by the US Bureau of Labor Statistics weighed on the greenback in the early trading hours of the American session and allowed EUR/USD to inch higher.
The monthly data showed that the Core Consumer Price Index (CPI) in the US fell to 1.4% on a yearly basis in January from 1.6% in December and fell short of the market expectation of 1.5%. With the initial market reaction, the US Dollar Index dropped to a two week low of 90.25 and was last seen losing 0.1% at 90.34.
On the other hand, Christine Lagarde, President of the European Central Bank (ECB), said on Wednesday that it was not the time to slow down the fiscal support. “The ECB can scale up the Pandemic Emergency Purchase Programme (PEPP) if needed,” Lagarde added, possibly capping the shared currency’s gains.
Later in the session, FOMC Chairman Jerome Powell will be delivering a speech on the state of the economy and the policy outlook.
EUR/USD technical outlook
Assessing EUR/USD’s near-term technical outlook, “EUR/USD maintains the strong tone following the bullish ‘reversal day’ from our target at 1.1945/14 – the 23.6% retracement of the entire 2020/2021 uptrend and first ‘measured top objective’ – and has cleared with ease the 38.2% retracement of the January/February fall at 1.2104,” Credit Suisse analysts noted.
“This sees the immediate risk stay higher with resistance seen next at the 55-day average at 1.2138, ahead of price resistance from the late January highs at 1.2156/90 zone, with this then expected to cap at first to define the top of a range,” analysts added.
Additional levels to watch for
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