EUR/USD Weekly Analysis: US Inflation Rises by Most in 6 Months.
The EUR/USD weekly forecast is bearish as the Fed will likely raise and keep rates high for longer due to the US economy’s resilience. According to Eurostat’s Thursday report, Eurozone inflation was only slightly higher than initially anticipated in January. This confirms that price growth has long since passed its peak.
Data from the Commerce Department revealed that consumer spending, which makes up two-thirds of US economic activity, increased by 1.8% in January, beating analyst expectations and representing the highest growth in nearly two years.
The Fed’s favored inflation indicator, the personal consumption expenditures (PCE) price index, also increased by 0.6% last month, the most in the previous six months. These reports followed the hawkish FOMC minutes and the jobless claims report that surprisingly fell. They all point to a resilient economy despite rising rates.
The daily chart shows the EUR/USD declining after breaking below the 20-SMA and the RSI below 50. This comes after the price found resistance at the 1.1004 key level. Bears took over and pushed the price lower to the 1.0526 support level.
At this point, bears might pause before the price breaks below the support and the downtrend continues. However, the pause might allow bulls to come in and retest the 20-SMA as resistance.