Muted reaction to inflation from euro-dollar

Euro-dollar declined somewhat in the aftermath of slightly stronger American inflation but with relatively low volatility. Central banks’ expected policies in the next few months broadly favour the dollar, but the impact of the trade war is more ambiguous.

With $1.02 and $1.05 looking like important areas of support and resistance respectively, EURUSD might be falling into a sideways trend, which is a fairly normal situation for a major forex pair. The slow stochastic is closer to neutral than oversold and there’s no signal of saturation from Bollinger Bands.

Although there was a large spike in buying volume on 3 February after that weekend’s gap, there wasn’t much momentum upward after that except to close the gap. Traders are now looking ahead to various European releases including German inflation and eurozone-wide jobs and GDP, followed by ZEW sentiment on 18 February.

This is my personal opinion, not the opinion of Exness. This is not a recommendation to trade.