- EUR/USD stabilized above 1.0800 after closing in negative territory on Thursday.
- Inflation data from the Eurozone could drive the Euro's valuation.
- The US economic docket will feature ISM Manufacturing PMI for February.
EUR/USD came under bearish pressure during the American trading hours on Thursday and closed the third consecutive day in negative territory. Although the pair manages to hold steady above 1.0800 on Friday, it could have a difficult time extending its recovery unless the Eurozone inflation data support the Euro.
Inflation in the US, as measured by the change in Personal Consumption Expenditures (PCE) Price Index, declined to 2.4% on a yearly basis in January, the US Bureau of Economic Analysis reported on Thursday. The Core PCE Price Index, which excludes volatile food and energy prices, rose 2.8% on a yearly basis, matching analysts' estimate.
Hawkish comments from Federal Reserve (Fed) policymakers following the inflation data helped the US Dollar (USD) outperform its rivals and caused EUR/USD to turn south. Atlanta Fed President Raphael Bostic said that it might be appropriate to start reducing rates in summer, San Francisco Fed President Mary Daly argued that cutting rates too quickly could cause inflation to get stuck and Cleveland Fed President Loretta Mester noted that they can't expect last year's disinflation to continue.
Euro price this week
The table below shows the percentage change of Euro (EUR) against listed major currencies this week. Euro was the weakest against the Japanese Yen.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF |
| USD |
| 0.03% | 0.31% | 0.45% | 0.84% | -0.04% | 1.50% | 0.46% |
| EUR | -0.02% |
| 0.28% | 0.41% | 0.80% | -0.06% | 1.47% | 0.43% |
| GBP | -0.31% | -0.29% |
| 0.14% | 0.53% | -0.34% | 1.16% | 0.15% |
| CAD | -0.45% | -0.42% | -0.14% |
| 0.36% | -0.49% | 1.06% | 0.01% |
| AUD | -0.84% | -0.81% | -0.54% | -0.40% |
| -0.86% | 0.65% | -0.37% |
| JPY | 0.04% | 0.07% | 0.36% | 0.49% | 0.88% |
| 1.53% | 0.49% |
| NZD | -1.51% | -1.49% | -1.21% | -1.07% | -0.68% | -1.55% |
| -1.05% |
| CHF | -0.44% | -0.43% | -0.15% | 0.01% | 0.41% | -0.50% | 1.05% |
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The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
Later in the session, Eurostat will release the Harmonized Index of Consumer Prices for February. On a yearly basis, the HICP is forecast to rise 2.5%, down from the 2.8% increase recorded in January. The Core HICP is seen increasing 2.9% in the same period.
Earlier in the week, HICP data from Spain and France came in stronger than expected. Meanwhile, annual HICP inflation in Germany softened to 2.7% from 3.1% as anticipated.
In case the Core HICP for the Eurozone rises at a stronger pace than forecast, the initial reaction could provide a boost to the Euro. On the other hand, a reading at or below the market consensus could hurt the currency and weigh on EUR/USD.
In the second half of the day, the ISM Manufacturing PMI will be featured in the US economic docket. If the headline PMI recovers above 50 and points to an expansion in the sector's activity, the USD could preserve its strength heading into the weekend.
EUR/USD Technical Analysis
EUR/USD found support near 1.0800 (psychological level, Fibonacci 23.6% retracement of the latest downtrend) but is yet to clear the 200-period Simple Moving Average (SMA) on the 4-hour chart, currently located at around 1.0820. Meanwhile, the Relative Strength Index (RSI) indicator stays slightly below 50, highlighting a lack of recovery momentum.
If EUR/USD manages to stabilize above 1.0820 and starts using that level as support, 1.0860 (broken ascending trend line) could be seen as next resistance before 1.0900-1.0910 (psychological level, Fibonacci 50% retracement).
On the downside, a 4-hour close below 1.0800 could attract technical sellers and open the door for an extended slide toward 1.0760 (static level) and 1.0720 (static level).