Eurusd sees modest gains amid cautionary US economic outlook and steady Eurozone inflation

EURUSD Analysis

Performance after Thursday
Period	Pct	Chg	Momentum
Thursday	0.06%	6.7 Pips
Week to-date	0.32%	34.5 Pips
March	5.17%	536.3 Pips

Upcoming key events (London Time)

No major events for the day.

What happened lately

In the United States, the recent economic data indicates several critical developments. Initial Unemployment Insurance Claims for the week ending March 15 rose slightly to 223,000, suggesting a marginal increase in jobless claims. Additionally, the Philadelphia Fed’s Manufacturing Business Outlook Survey in March reflected a decline to 12.5 points from 18.1 points in February, pointing to a slowdown in manufacturing activity. The Federal Reserve’s interest rate projections have been adjusted downwards, with a first-year forecast dropping to 3.4% and a second-year expectation lowering to 3.1%, signifying caution in the economic outlook. The Fed maintained its Federal Funds Rate at 4.5%, indicating a stable monetary policy stance.

Germany’s Producer Price Index (PPI) showed mixed signals. The month-on-month PPI decreased to -0.2% in February from -0.1% in January, indicating a slight deflationary pressure at the producer level. Conversely, the annual PPI increased to 0.7% in February compared to 0.5% in January, suggesting cost pressures may be rising over a longer timeline.

In the Euro Area, the Harmonized Index of Consumer Prices (HICP) for February exhibited a decrease to 0.4% from 0.5% in January, together with a drop in the Core HICP to 0.5% from 0.6%. This moderation in consumer inflation showcases a gradual easing, while the core HICP on an annual basis remained steady at 2.6%. These figures reflect controlled inflationary dynamics within the region amid broader economic uncertainty.

The EUR/USD pair saw a modest increase of 0.06% to 1.09100, with the market remaining in consolidation. The data from the U.S. points towards a cautious economic outlook with softer manufacturing activity and a bearish shift in the Fed’s interest rate projections. This could suggest a weaker U.S. dollar in the mid-to-long term, potentially supporting the euro relative to the dollar. On the other hand, steady core inflation in the Eurozone may bolster the euro’s attractiveness, potentially leading to upward pressure on the EUR/USD exchange rate. However, with no major upcoming economic events, the pair might continue in its range-bound consolidation in the immediate term.

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What can we expect from EURUSD today?

EURUSD on Thursday rose 0.06% to 1.09100. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks mixed as the pair is likely to consolidate above 1.09029 (S1).

Looking ahead today, to see upside interest, we prefer to look at price breakout of last daily high of 1.09164 or trades above daily pivot 1.09097. Break above could target R1 at 1.09167. While to the downside, we are looking at 1.09029 (S1) and daily low of 1.09026 as support levels. EURUSD need to break on either side to indicate a short-term bias. A break above 1.09164 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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