EUR/USD wavers after the mixed US inflation numbers
- The EUR/USD rose slightly after the US released mixed CPI data.
- In total, the consumer price index rose by 1.7% in February.
- Focus shifts to the ECB interest rate decision.
The EUR/USD rose slightly after the relatively mixed US consumer inflation data and the start of the European Central Bank (ECB) decision.
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Consumer prices have been on a strong upward trend in the past few months after dropping to a multi-year low in 2020. According to the Bureau of Labour Statistics (BLS), the headline consumer price index rose by 0.4% in February after rising by 0.3% in the previous month. In total, the prices rose by 1.7% on a year-on-year basis.
The closely-watched core CPI increased by 0.1% in February after rising by 0.1% in January. It rose by 1.3% on an annualised basis.
Several factors contributed to higher consumer inflation in the United States. First, in January, Donald Trump signed into law a $900 billion stimulus package that provided $600 to most people. It also enhanced unemployment benefits. While the bill was passed in January, many people received the funds in February.
Second, the price of crude oil has been on an upward trend. Indeed, Brent and the West Texas Intermediate (WTI) have risen by more than 40% this year. This increase has been reflected in most goods, including gasoline prices.
Finally, the number of coronavirus cases has been steadily falling in the US, helped by the ongoing vaccinations. This has boosted business activities and affected consumer prices.
Therefore, analysts are pricing-in faster inflation as the Biden administration unleashes another $1.9 trillion stimulus package.
Further, the EUR/USD price wavered as traders wait for the outcome of the ECB interest rate meeting that started today. Analysts believe that the ECB will hold its pandemic response tools steady. It will leave interest rates in the negative zone and the quantitative easing target at 1.8 trillion euros.
EUR/USD technical outlook
The EUR/USD pair rose slightly as forex traders reflected on the latest US inflation data. On the three-hour chart, the pair is at the same level as the 15-period and 25-period exponential moving averages. Also, the price is between the standard pivot point and first support. Therefore, in my view, the pair may remain in this range ahead of the ECB decision.