Technical Bias: Bullish
- EURUSD climbed to a more than 2-week high before consolidating in the low-1.09 region.
- US CPI increased 0.2% in February and was unchanged YoY.
- US dollar index advanced 0.2% to 97.21.
The EURUSD reversed its gains on Tuesday, falling to the low 1.09 region after US inflation showed signs of moderating after three consecutive monthly declines.
The EURUSD declined around 40 pips to 1.0917 after bottoming out at 1.0896. The pair had previously climbed to a session high of 1.1027, the highest level since March 5. Initial support is likely found at 1.0856 and resistance at 1.1062.
The dollar was firmer against a basket of competitor currencies after recording its biggest single-week drop since 2011. The dollar index (DXY) climbed 0.2 percent to 97.21.
In economic data, US consumer prices rebounded in February following three consecutive decreases, a sign underlying inflation was improving. The monthly CPI rate edged up 0.2 percent, following January’s 0.7 percent drop. Compared to year-ago levels, the CPI rate was unchanged.
Gasoline prices rose for the first time since June, official data showed.
So-called core inflation, which strips away food and energy, edged up 0.2 percent in February and 1.7 percent year-on-year.
Elsewhere, US manufacturing PMI improved in March, signaling that factory activity was improving after last year’s slowdown. Markit’s flash US manufacturing PMI increased 0.2 percentage point to 55.3 in March, as output rose at the fastest rate since September and new orders rose at the strongest rate in five months.
Eurozone PMI also improved in March, according to Markit. The Eurozone composite PMI – a gauge of manufacturing and service activity – rose to 54.3, a 46-month high. The increase suggested Eurozone GDP expanded by 0.3 percent in the first quarter, buoyed by a 0.4 percent expansion in Germany.