The euro (EUR) weakened against the US dollar (USD) on news that inflation in the United States rose by 3.1% year-on-year last month, beating market expectations.
The EUR/USD exchange rate looks set to hit the support level at 1.0400, according to analysis, following the jump in the U.S. dollar after the release of last month’s inflation data. The price of the euro is declining against the dollar as inflation posted yearly numbers of 3.1%, beating estimates of 2.9%. Importantly, market analysis suggests that the broad basket of goods and services indicates fading inflation pressures.
The reading of the latest U.S. inflation report comes from a strong employment report earlier this month and Federal Reserve (Fed) Chairman Jerome Powell’s outright resistance to the mood for a possible cut.
Additionally, market analysts note that currently, around 90 basis points of Fed interest rate cuts are anticipated for the year, a stark contrast to the 150 basis points expected at the start of January. This downward shift in price expectations is generating a strengthening on the part of the USD and is moving the EUR/USD price toward the 1.0500 level.
Similarly, the inflation data suggests that the economy is undergoing adjustments. It’s important to remember that another CPI report will be released before the next Fed meeting scheduled for March.
Daily Technical Analysis EUR/USD February 15th
The daily Forex chart shows a continuing bearish trend for the EUR/USD pair, with a potential break below the 1.0700 support level suggesting bearish control. This outlook considers upcoming U.S. economic data, including retail sales figures and weekly unemployment claims.
If positive, bears may advance towards support levels closer to 1.0670 and 1.0580, which are powerful enough to push the indicated technicals to high oversold saturation levels. On the other hand, during the same time, there may be no initial breakout of the decision channel for the EUR/USD pair, without reaching the resistance level at 1.0885.
