EUR/USD extends gains to the 1.2440 region

Dollar's sell-off decelerate but persists, with European currencies reaching fresh weekly highs and the EUR/USD pair nearing 1.2440 at the time of writing, its highest since February 6th.

US inflation unexpectedly surged in January, bringing back fears triggered by the US Nonfarm Payroll report of a possible upcoming faster pace of rate hikes in the world's largest economy. The greenback soared, and stocks plummeted as an immediate reaction, as inflation rose 2.1% yearly basis, surpassing expectations of 1.9% and above 2% for a second consecutive month. US inflation rose by 0.5% in the month, well above the expected 0.3%. Core inflation was up 0.3% MoM and 1.8% YoY, also surpassing market's estimates.

Dollar strength, however, didn't last long, as Wall Street reversed course on fears receding. Thursday will bring the release of the EU December Trade Balance, while the US will unveil the NY Empire State and Philadelphia manufacturing indexes, January PPI, and weekly unemployment figures.

From the current level, an immediate and relevant resistance is located at 1.2480, where selling interest contained advances early February, followed by 1.2535, the multi-year high set last December.

1.2400 is the immediate support, the 23.6% retracement of the January rally, followed by 1.2350 and the 1.2300 level, this last the 38.2% retracement of the mentioned rally.