- This year’s economic growth in the Eurozone is likely greater than anticipated.
- US consumer price index (CPI) data is anticipated to rise by 0.5% in January.
- US services inflation has not yet shown any signs of easing.
Today’s EUR/USD price analysis is bullish. Tuesday saw a rise in the Euro before a highly anticipated report on inflation. According to the European Commission, this year’s economic growth in the Eurozone is likely to be greater than anticipated, and inflation will be lower than predicted at the end of 2022.
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According to the EU executive arm, the 20 nations that use the Euro are expected to have economic growth this year of 0.9%, as opposed to the 0.3% anticipated in November.
According to a Reuters poll, the headline number of the US consumer price index data is anticipated to rise 0.5% in January after dipping 0.1% in December.
In contrast to early predictions for deeper rate reduction later this year, the market now expects US interest rates to peak around 5.2% in July and close the year at 4.9%.
Investors will analyze Tuesday’s report to determine the trajectory of prices because Fed Chair Jerome Powell reiterated last week that disinflation was underway. Although there are tentative indications that US inflation is slowing, services inflation, closely related to wage growth, has not yet shown any signs of easing.
While the labor market is still tight and wage growth is high, there is a chance that the underlying inflation data will surprise to the upside.
EUR/USD key events today
Investors will pay close attention to the US CPI report as it will guide the Federal Reserve on its next policy move. This will likely cause a lot of volatility.
EUR/USD technical price analysis: Control goes to buyers above the 30-SMA
The 4-hour chart shows EUR/USD in a bullish move, having crossed above the 30-SMA. The RSI has also crossed above the 50-level showing strong bullish momentum. The price was previously in a bearish trend, making lower highs and lower lows until buyers took over at the 1.0655 support level.
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The price must break above the previous high to confirm the end of the bearish trend and the start of a bullish trend. This would mean going above the 1.0801 resistance.
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Saqib Iqbal
