For a second day, EUR/USD trades lower as the USDOLLAR recovers from its weekly losses. This comes just before Friday’s release of the Federal Reserve’s preferred inflation number. But the EUR/USD pair has fallen to a new intraday low of about 1.0880, making yesterday’s drop from the highest levels since April 2022 even bigger.

Following the positive printing of the US fourth-quarter (Q4) annualized GDP, to 2.9% from 2.6% expected and 3.2% previously, the USDOLLAR Index (DXY) rose to 101.85, extending the late Thursday comeback. However, US 10-year and 2-year Treasury bond rates show a two-day increase of roughly 3.51% and 4.19%, respectively, at press time.

Bears in the EUR/USD pair were put to the test when negative US personal consumption expenditures (PCE) data called into question the Fed’s worries about a rise in interest rates. A similar trend can be seen with the EUR/USD currency pair, which has found support from comments in favor of the European Central Bank’s (ECB) 0.50% rate hike ahead of the pre-meeting silent period.

On a separate note, the EUR/USD exchange rate appears to be under pressure from expectations that the US debt ceiling deadline would be avoided, with support from the House Republicans’ willingness to push it back to September.

In light of this, the S&P 500 futures show slight declines despite Wall Street’s gains. Unless the US Core PCE-Prices Index for December displays particularly gloomy statistics, the absence of clarity from the US data and the hawkish concerns from the ECB will keep EUR/USD purchasers hopeful.

EUR/USD Technical Outlook

Yesterday, the EUR/USD pair went through some minor losses to check the EMA50. The stochastic indicator shows a strong bullish momentum, which could now be used to drive the price to its next destination of 1.1030 and continue its main upward trend.

Consequently, our optimistic outlook remains intact for the near future. Breaking the 1.0845 mark may cause a dip towards 1.0745 before prices attempt to rise again.

The technical analysis predicts that today’s trading range will be between 1.0800 and 1.0970. The lower end is known as the support level, while the higher end is referred to as the resistance level.

The expected trend for today: Bullish