EUR/USD Soars After Weaker US CPI Data: Key Levels and Trading Insights

EUR/USD surged sharply after weak US CPI. It hit an intraday high of 1.03540 and currently trading around 1.03417.

CPI Data Overview

The latest Consumer Price Index (CPI) data for December 2024 presents some key inflation trends in the U.S. The headline CPI increased by 0.4% month-over-month, and that is a year-over-year inflation rate of 2.9%, the highest since July 2024. The core CPI, which excludes food and energy prices, rose by 0.2% month-over-month, a little lower than the expected 0.3%. Year-over-year, core inflation stands at 3.2%, better than the forecast of 3.3%. This will suggest a small softening of core inflation pressures that, in turn, could affect future interest-rate decisions by the Federal Reserve. The impact of this report is, of course, being watched in markets within the U.S. dollar and in the overall financial markets. Overall, this CPI data is essential as it helps inform economic policy as the country enters 2025.

Technical Analysis of EUR/USD

The pair is holding above short and long-term moving averages in the 4-hour chart. Near-term resistance is seen at 1.0360; a break above this may push the pair to targets of 1.0400/1.0435/1.04635, 1.0500, 1.0550, and 1.0600. Major bullish momentum is likely only if prices can break above 1.0660, where levels of 1.0700, 1.0760, and 1.0800 await. On the downside, support is seen at 1.0280 any violation below will drag the pair to 1.0220/1.01640//1.0100.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)- bullish

Average Directional Movement Index (ADX) - bullish.  It is good to buy on dips around 1.0320, with a stop-loss at 1.0275 for a target price of 1.0400/1.0435.