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  • Germany’s inflation decreased but was still higher than expected.
  • Consumer prices in Spain increased by 3.3% in March.
  • The number of Americans who applied for new jobless benefits increased slightly last week.

Today’s EUR/USD outlook is bullish. On Thursday, the euro hit a one-week high against the dollar as German inflation data helped the common currency rise and banking worries subsided.

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In March, Germany’s inflation decreased significantly due to lower energy costs. However, it was still higher than expected, putting pressure on the European Central Bank to keep tightening its monetary policy.

Separate data revealed that consumer prices in Spain increased 3.3% in March compared to the same month a year before, which was less than experts anticipated.

Since July, the European Central Bank raised its key deposit rate by 350bps to 3% to rein in inflation and has stated that any further increases will rely on data.

Bipan Rai, North America director of FX strategy at CIBC Capital Markets in Toronto, stated that a divergence was developing between the ECB and the Fed that would affect the dollar.

He added that the gap between the ECB and the Fed’s policy rates might eventually close, based on the indications provided by the European inflation data. The ECB has more work to do regarding inflation.

According to data released on Thursday, the number of Americans who applied for new jobless benefits increased slightly last week. However, there are still no indications that the tightening credit conditions materially affect the country’s tight labor market.

EUR/USD key events today

Investors will pay attention to the Eurozone inflation report and a speech from ECB president Christine Lagarde. The US will also release the core PCE price index, Fed’s preferred inflation gauge.

EUR/USD technical outlook: Bulls vulnerable near the 1.0900 resistance

EUR/USD technical outlook

The 4-hour chart shows EUR/USD in a strong bullish move, with the RSI close to the overbought region and the price trading far above the 30-SMA. The bullish move started at the 1.0751 support before pausing after a break above the 30-SMA. Bulls then got stronger and pushed the price off the SMA to the 1.0900 resistance level. 

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Although the price went slightly above this resistance, it is still in the zone where bears might reverse the move. Bulls, therefore, need a stronger candle to break above this level.

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