Eur/usd consolidates amid mixed us and euro area economic data

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	-0.02%	-1.7 Pips
Week to-date	0.5%	54 Pips
March	4.91%	509.3 Pips

Upcoming key events (London Time)

Fri 02:00 PM USD Index of Consumer Sentiment

What happened lately

The U.S. economic indicators for February display mixed results, with a notable decline in the Producer Price Index (PPI) excluding food and energy sectors, which experienced a monthly drop to -0.1% from January’s 0.5%. The 12-month PPI also showed a decrease from January’s 3.8% to February’s 3.4%. Meanwhile, the Initial Unemployment Insurance Claims slightly declined to 220,000 from the previous week’s 221,000. On the inflation front, the Consumer Price Index (CPI) excluding food and energy sectors decreased to 0.2% from 0.4% over the month, while the 12-month CPI inflation rate fell from 3% in January to 2.8% in February. Furthermore, the U.S. Monthly Treasury Budget Statement saw a substantial decline to -$307 billion compared to -$129 billion in January.

Conversely, the Euro Area experienced some positive economic activity, with industrial production increasing by 0.8% in January from a revised contraction of -0.4% in December. This upturn reflects a resurgence in industrial output and suggests improving conditions in the Euro Area economy amid ongoing global economic challenges.

The latest economic updates from the U.S. and the Euro Area have had minor impacts on the EUR/USD exchange rate, which fell slightly by 0.02% to 1.08840. The U.S. data suggest a softening inflation environment, given the declines in both PPI and CPI, indicating potentially less aggressive monetary policy tightening by the Federal Reserve in the future. The weaker-than-expected PPI and flat CPI give a sense of underlying deflationary pressures, possibly capping gains in the dollar index. Conversely, improved Euro Area industrial production could support the euro against the dollar. However, the movement in EUR/USD is also influenced by expectations surrounding upcoming data releases, such as the U.S. Index of Consumer Sentiment. Traders will be eyeing these upcoming reports to gauge economic sentiment in the U.S., which could provide further directional cues for the EUR/USD pair.

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What can we expect from EURUSD today?

EURUSD on Thursday dropped -0.02% to 1.08840. Price is above 9-Day EMA while Stochastic is falling in overbought zone.

Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.08809 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.08900 or trades above daily pivot 1.08854. Break above could target R1 at 1.08886. While to the downside, we are looking at 1.08809 (S1) and daily low of 1.08823 as support levels. EURUSD need to break on either side to indicate a short-term bias. A close below 1.08823 would indicate selling pressure.

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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