Following the release of the U.S. Inflation Rates, the greenback caved as traders digested the idea of inflation cooling off. Year-on-year inflation for February slowed from 6.4% a year prior, to 6%, in line with consensus.
EURUSD currency pair traders are operating in murky territory with the key European Central Bank (ECB) interest rate decision looming, while the U.S. follows suit six days later with retail sales and labour market reports in between.
Bullish traders drove the EURUSD into an uptrend following price crossing over above the 100-day moving average. Bulls committed to their purpose, causing a breakout above resistance, now playing as support at the 1.06906 level.
Volumes have subsided, and price is consolidating in a rising wedge pattern, considered bearish, as bulls and bears scuffle. With bulls seemingly crossing the line barely, price is approaching the 1.07875 resistance level on weakening volume, indicating the lack of trading activity.
A breakout below the support of the pattern on high volumes could signal the beginning of a bearish trend, with the 1.06906 level earmarked as a possible level of interest. Alternatively, if bulls commit to their progress, a high volume breakout above the pattern could lead price towards the 1.07875 resistance level.
With the ECB interest rate decision around the corner, the Euro will likely be boosted by the expected 50 basis point rate hike at the expense of the greenback in the interim. U.S. producer inflation, Retail sales and labour market reports ahead will be requisite in determining if U.S. inflation is indeed cooling down. The Euro will likely find firm footing on the back of a U.S. economic slowdown.
Sources: Reuters, TradingView