Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.0600.
- Add a stop-loss at 1.0400.
- Timeline: 1-2 days.
Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.0400.
- Add a stop-loss at 1.0600.
The EUR/USD exchange rate was unchanged after the latest European inflation data and the weekend German election. The pair was trading at 1.0480, a crucial resistance level, ahead of the upcoming US consumer confidence data. It has risen by 3% from its lowest level this year.
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US consumer confidence data
The EUR/USD pair wavered after Friedrich Merz won the closely-watched election. His victory helped to beat the upcoming AfD, which managed to gain more votes in parliament. Merz has hinted that he will be ready to borrow more money to boost the struggling German economy.
The pair also reacted to a report by Eurostat, which showed that the headline Consumer Price Index (CPI) rose to 2.5% in January. Core inflation, which excludes the volatile food and energy prices, remained unchanged at 2.7%.
The European inflation has risen gradually in the past few months as it moved further away from the 2% target. As such, there is a likelihood that the European Central Bank (ECB) will moderate its interest rate cuts going forward. The bank has been in a rate cutting cycle in the past few months as it sought to boost the economy.
The next key EUR/USD news will come out from Germany, where the statistics agency will publish the latest GDP data. Economists expect the report to show that the economy contracted by 0.2% in the fourth quarter.
The pair will also react to the upcoming US consumer confidence data. Economists expect the report to show that the confidence dropped from 104.1 in January to 103.3. A potential reason for falling confidence is the ongoing layoffs by the Trump administration.
EUR/USD technical analysis
The EUR/USD pair has moved sideways in the past few weeks and moved to the key resistance at 1.0505. This is a crucial level where it has failed to move above several times this year.
The pair has moved above the 50-day Exponential Moving Average (EMA). Also, oscillators like the Relative Strength Index (RSI) and the percentage price oscillator have pointed upwards. The RSI has crossed the neutral point at 50, while the PPI has crossed the zero line.
Therefore, a move above the resistance level at 1.0505 will be a sign that bulls have prevailed, which will lead to more gains, potentially to 1.0600. A drop below the support at 1.0400 will invalidate the bullish outlook.
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