EUR/USD hovers around 1.0530

The EUR/USD pair’s upside momentum faltered once again around 1.0530. The breakout of that resistance could lead up to a test of 1.0713. The EUR/USD pair gives away initial gains and sinks in the red territory below the 1.0500 support on Thursday.

The constructive outlook for EUR/USD should remain unchanged while above the key 200-day SMA, today at 1.0314. It is noteworthy that Eurozone government bonds were steady on Thursday, halting a rally earlier in the week on signs that inflation may have peaked in the bloc, with heavy government bond supply adding to pressure on prices.

Preliminary inflation data released earlier from Germany, France and Spain all showed consumer prices rose at a slower pace in December than November, following an easing in energy price rises.

Annual harmonized consumer prices in Italy, the 20-nation euro area’s third largest economy, slowed to 12.3% in December from 12.6%, matching expectations.

Germany’s 10-year government bond yield, the benchmark for the bloc, was last up 1 basis point (bp) to 2.29%. It has fallen 28 bps this week after closing out 2022 at its highest level since 2011. Yields move inversely with prices.

Germany’s 2-year yield, which is sensitive to changes in interest rate expectations, was up 3 bps to 2.618%.