EUR/USD falls as attention shifts to EU, US inflation data

The EUR/USD pair has fallen for the second consecutive day against the US dollar as investors assess recent data from the US, revealing the economy remains strong. The US Bureau of Economic Analysis reported the second estimate of GDP for the last quarter of 2023, coming a tenth lower at 3.2% YoY compared to the 3.3% preliminary reading. Recent data suggests the economy is losing momentum, as Retail Sales and Durable Goods Orders declined in January.

The pair is 0.10%, trading at 1.0833 at the time of writing. EUR/USD traders are focusing on the release of the January inflation figures, which are expected to show a deceleration in the Personal Consumption Expenditure (PCE) and the Core PCE, with both cases slowing compared to December’s data. If the data eases, traders may see a more aggressive re-pricing of rate cut expectations by the swaps market, which converged towards the Fed’s projections of three rate cuts towards the end of 2024.

Across the pond, the Eurozone economy is stagnating, with Economic Sentiment falling again in February from 96.1 to 95.4, below estimates of an improvement to 96.7. Traders are also eyeing the release of the latest inflation data from the Eurozone, with estimates for the Harmonized Index of Consumer Prices (HICP) at 2.5% and the core HICP at 2.9%.

From a technical perspective, the EUR/USD is trading sideways, with a daily close above the 200-day moving average (DMA) at 1.0827 potentially testing the 50-DMA at 1.0878 before testing 1.0900.