EUR/USD rallies 0.5% as euro gains on strong CPI, U.S. GDP miss
EUR/USD established 1.0800 as the nearest support
The EUR/USD pair surged 0.5% on Wednesday breaking out of a week-long trading range between 1.0840 and 1.0760.
This renewed bullish strength began with Wednesday Germany’s preliminary CPI data. The figures came in stronger than expected—0.4% versus the forecasted 0.2%. This beat caught market participants off guard, giving the euro a tailwind. Inflation data like this fuels expectations that the European Central Bank could remain hawkish, propping up EUR.
On the flip side, the dollar took a hit from a weaker-than-expected US GDP. The economy grew at 2.8% in the latest quarter, falling short of the previous 3% reading. Slowing growth raises questions about the Fed's rate trajectory, making the greenback less attractive and offering more space for EUR/USD to rally.
EUR/USD technical and fundamental outlook
After the breakout, EUR/USD established 1.0800 as the nearest support, now reinforced by the bullish 20 and 50 EMAs. Even though we saw a pullback from Wednesday’s high of 1.0870, support at 1.0840 held firm during today’s Asian session. Bulls regrouped and are now positioning for another test of 1.0870, eyeing a potential move higher if upcoming data aligns.
The next big moves hinge on upcoming inflation readings. In the Eurozone, the Core CPI Flash estimate came in at 2.7%, matching the previous figure but just above forecasts at 2.6%. This reading may support the euro, as it signals persistent inflation that could justify further ECB tightening or keep rates elevated. Meanwhile, in the US, markets are also watching the Core PCE Price Index, forecasted to tick up to 0.3% from 0.1%. If this data rises more than expected, it could strengthen the dollar, as it would likely reinforce the case for the Federal Reserve to maintain a hawkish stance, making EUR/USD sensitive to any surprises.
U.S. jobs miss and ECB cut speculation keep EUR/USD range-bound between 1.0840 resistance and 1.0760 support. Traders eyes US core PCE data.
