Eurusd rises 0.56% amid U.S. economic updates and market anticipation

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.56%	57.4 Pips
Week to-date	0.6%	61 Pips
January	-0.97%	-100.8 Pips

Upcoming key events (London Time)

Wed 01:30 PM USD CPI Inflation Rate (12-mth)
Thu 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

In the United States, there has been a notable improvement in the Monthly Treasury Budget Statement for December, with the deficit shrinking to -$87 billion from -$367 billion in November. This suggests a better fiscal condition and narrower shortfalls in spending. Additionally, changes in the Producer Price Index (PPI) show mixed dynamics. The PPI excluding food and energy sectors remained stagnant at 0% in December, a drop from 0.2% the previous month, indicating subdued inflationary pressures in certain segments. However, the 12-month PPI saw an uptick to 3.3% from 3% in November, suggesting persistent pricing pressures over a longer term. The month-on-month PPI slightly reduced to 0.2% from 0.4% in November, hinting at a moderation in producer prices. Meanwhile, the 12-month PPI excluding food and energy rose slightly to 3.5% from 3.4%. These indicators portray a complex picture of inflation and economic health, with moderate inflation momentum but signs of potential pressures accumulating over the year.

The EURUSD increased by 0.56% to 1.03054, likely influenced by these updates in the U.S. economic data. The narrowing U.S. budget deficit could be perceived as a positive sign for the dollar, yet differentiated PPI movements provide contrasting signals about inflation and economic strength. A stable or rising inflation might typically weaken the dollar as it posits potential interest rate adjustments, influencing the currency pair. With upcoming significant events such as the U.S. CPI Inflation Rate and the Monthly Retail Trade data releases, further volatility might be observed in exchange rate movements. Depending on these new data points, if the U.S. inflation rate shows an unexpected rise, it could prompt anticipations of tighter monetary policies, potentially strengthening the dollar. On the other hand, weak retail sales could weigh negatively on the dollar, benefitting the euro and possibly supporting further gains in EURUSD.

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What can we expect from EURUSD today?

EURUSD on Tuesday rose 0.56% to 1.03054. Price is below 9-Day EMA while Stochastic is rising.

Updated daily direction for EURUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.03299 with break above could target R2 at 1.03545 or figure level area. While towards the downside, we are looking at daily low of 1.02382 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.03086 may suggest continuation after recent positive movement.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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