EUR/USD Signal: Key Levels to Watch Ahead of US CPI Data

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The EUR/USD price declined ahead of the important US CPI data scheduled for later today. The EURUSD pair is trading at 1.1875, which is slightly below yesterday’s high of 1.1913.

What happened: The EUR/USD price jumped yesterday as the yields on the US bonds declined. This relief rally was short-lived as the price declined during the American and Asian sessions. 

Today, the biggest focus for the pair will be the American consumer price index data. Analysts believe that the recent $900 billion stimulus package helped push the headline CPI close to the Fed target of 2.0%. Precisely, they expect the data to show that the CPI rose to 1.7% in February while the core CPI rose to 1.5%. In a statement in December, Fed chair Jerome Powell said:

“And we’re not going to preemptively raise rates until we see inflation actually reaching 2% and being on track to exceed 2%. That’s a very strong commitment, and we think that’s the right place to be.”

The US CPI data comes at a time when the bond market is signaling that inflation is set to rise. Indeed, inflation expectations have risen to the highest level in more than a decade.

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EUR/USD technical outlook

The hourly chart shows that the EUR/USD has been pressured since yesterday. It has moved below the short-term moving averages and is also below the descending purple trendline. The Relative Strength Index (RSI) has also continued to decline. 

Therefore, in my view, the EURUSD price will continue dropping as yesterday’s relief rally fades. If this happens, the next key level to watch is this week’s low at 1.1830, which is along the first support of the standard pivots. However, a jump above 1.1918 will invalidate this trend.

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EURUSD technical chart


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