EUR/USD forecast ahead of Eurozone consumer inflation data

The EUR/USD price held steady on Monday morning ahead of the latest Eurozone preliminary consumer price index (CPI) and business and consumer confidence data. The pair rose to 1.1807, which was substantially higher than last week’s low at 1.1665.

Eurozone inflation data

The EUR/USD will likely see some volatility this week as investors reflect on the upcoming Eurozone flash consumer inflation numbers scheduled for Tuesday. The median estimate of analysts polled by Reuters is that the headline CPI rose from 2.2% in July to 2.8% in August. This figure will still be ahead of the European Central Bank (ECB) estimate. 

Before the aggregate Eurozone CPI data, some key countries like Germany, Italy, and Spain will publish their estimates on Monday. The German figure is expected to increase from 3.8% in July to 3.9% in August. The harmonised inflation is also expected to rise from 3.1% to 3.4%. 

The EUR/USD price will also react to the latest Eurozone business and consumer sentiment data by the European Commission. These are important numbers since they are leading indicators of consumer and business spending. Besides, highly confident companies tend to hire more companies and spend more money on investments.

Economists expect that the Eurozone consumer confidence declined to -5.3 in August while the services and industrial sentiment fell to 18.8 and 13.4 respectively. This decline will mostly be because of the recent surge in the number of Delta cases and the rising cost of doing business as costs escalate.

The pair is also reacting to the relatively mixed tone by Jerome Powell at the Jackson Hole summit. In his statement, the Fed chair said that the bank will likely start tapering later this year provided that the impacts of the Delta variant are muted. He also said that the bank was not considering doing tapering any time soon.

EUR/USD technical analysis

The two-hour chart shows that the EUR/USD price has been on a strong bullish trend recently. Along the way, it moved above the 50% Fibonacci retracement level. It is now slightly below the 61.8% retracement level and above the 50-period and 25-period exponential moving averages (EMA).

The pair also moved slightly above the key resistance at 1.1804, which was the highest level on August 13. Therefore, the pair will likely maintain the bullish trend as investors target the key resistance at 1.1900.