EUR/USD remains hunkered below 1.0500 as bulls run out of steam.
European data is limited for most of the week, with Fed speakers set to dominate.
German and US inflation figures will close out the week.
EUR/USD cycled familiar territory on Monday, testing the 1.0500 handle but failing to make any meaningful headway as Fiber continues to churn near the top end of recent consolidation.
Last week's rise in US inflation figures triggered a new wave of risk aversion among investors. Their attention is now squarely on the upcoming US Personal Consumption Expenditure (PCE) inflation data expected later this week. Traders are hoping that the early-year increase in headline inflation in the US will diminish swiftly and not lead to another prolonged struggle over “transitory” inflation that runs too hot for the Federal Reserve (Fed) to implement rate cuts. Market participants eager for a quicker pace of Fed rate cuts in 2025 are already feeling the pressure as US President Donald Trump attempts to ignite a global trade war. Additionally, another surge in inflation may extinguish any remaining hopes for rate reductions. On Monday, President Trump reiterated threats of high tariffs on Canada and Mexico, cautioning that tariffs are still expected to take effect “next month,” following his recent concession on tariff pressures and granting delays to nearly every country he has targeted with import taxes on his own citizens.
German Consumer Price Index (CPI) inflation is also due on Friday, as well as German Retail Sales activity figures. As a bellwether for pan-EU data, Germany’s data prints on Friday will likely draw some Fiber traders’ eyes, but the key market-moving print will still be US PCE inflation.
EUR/USD price forecast
EUR/USD continues to churn near the 50-day Exponential Moving Average (EMA) near 1.0435, with price action hobbled just south of 1.0500. Daily candles continue to close inside of a near-term rough wedge, albeit with some uninspired tests in either direction.
The pair’s last major swing low dipped below 1.0200 in mid-January, but bullish momentum remains limited with the pair still trading well below the 200-day EMA at 1.0650.
EUR/USD daily chart
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