EUR/USD consolidates above 1.1800 as trades await Eurozone CPI and US data

EUR/USD lacks follow-through buying as a softer risk tone lends support to the safe-haven USD.
The divergent ECB-Fed policy outlooks might continue to act as a tailwind for the currency pair.
Traders now look forward to the flash Eurozone CPI print for some impetus ahead of the US data.

Haresh Menghani FXStreet

The EUR/USD pair struggles to capitalize on the previous day's modest bounce from the 1.1780-1.1775 area, or over a one-week low, and oscillates in a narrow band during the Asian session on Wednesday. Spot prices currently trade around the 1.1815 zone, nearly unchanged for the day, as traders keenly await the release of the flash Eurozone consumer inflation figures.

The preliminary estimate is expected to show that the Harmonized Index of Consumer Prices (HICP) fell to the 1.7% YoY rate in January from 1.9% in the previous month, while the core gauge is seen holding steady at 2.3% YoY. The European Central Bank (ECB) views this as a temporary deviation, suggesting no immediate adjustments to monetary policy. Nevertheless, the data could influence the shared currency and provide some impetus to the EUR/USD pair.

Later during the North American session, traders will take cues from the US ADP report on private-sector employment and the US ISM Services PMI, which might further contribute to producing short-term opportunities. The immediate market reaction to the releases, however, is more likely to be limited as the focus will remain glued to the highly anticipated ECB policy meeting on Thursday. The outcome will play a key role in driving the EUR/USD pair in the near term.

In the meantime, a slight deterioration in the global risk sentiment offers some support to the safe-haven US Dollar (USD) and acts as a headwind for the currency pair. That said, the growing acceptance that the US Federal Reserve (Fed) will cut rates two more times in 2026 could cap the USD and support the EUR/USD pair. This warrants caution before positioning for an extension of the EUR/USD pair's pullback from the highest level since June 2021, touched last week.

Economic Indicator

Harmonized Index of Consumer Prices (YoY)

The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.