Bullish view
Buy the EUR/USD pair and set a take-profit at 1.2000.
Add a stop-loss at 1.1750.
Timeline: 1-2 days.
Bearish view
Sell the EUR/USD pair and set a take-profit at 1.1750.
Add a stop-loss at 1.2000.
The EUR/USD exchange rate held steady after Europe published an encouraging consumer inflation report. It was trading at 1.1815 on Thursday, a few points above this week's low of 1.1742.
European Inflation Continues Falling
The EUR/USD pair has retreated in the past few weeks, moving from the year-to-date high of 1.2093. It wavered after Eurostat published an encouraging consumer inflation report.
The report showed that the headline Consumer Price Index retreated from 0.2% in December to minus 0.6%. That retreat helped to push the CPI from 2% in December to 1.7% in January.
Similarly, core inflation, which excludes the volatile food and energy prices, retreated from 2.3% to 2.2%. That inflation report means that the European Central Bank (ECB) has already achieved the European target of 2.0%.
Therefore, the central bank will likely maintain interest rates unchanged in has foreseeable future. Some analysts believe that the bank may decide to hike interest rates later this year or in 2027.
The EUR/USD pair also reacted to the latest German GDP data. According to the German statistics agency, the economy expanded by 0.4% in the fourth quarter after growing by 0.3% in Q3. This is important as Germany is the biggest economy in the region.
The next key catalyst for the EUR/USD pair will be the upcoming US initial and continuing jobless claims data. Economists expect the data to show that initial jobless claims will be 206k, lower than the previous 215k. Also, the continuing jobless claims is expected to grow to 1.86 million.
EUR/USD Technical Analysis
The daily timeframe chart shows that the EUR/USD pair has continued rising in the past few months. It formed an ascending channel, which connects the lowest and highest levels since July 1 last year.
The pair has remained slightly above the 50-day Exponential Moving Average (EMA). Also, the Relative Strength Index (RSI) moved above 50 and is pointing upwards. It has moved above the Supertrend indicator.
Therefore, the pair will likely continue rising as bulls target the key psychological level at 1.2000. On the flip side, a move below the key support level at 1.1720 will invalidate the bullish outlook.