EUR/USD snaps the three-day losing streak above 1.0800, focus on Eurozone HICP, US PMI data

The EUR/USD pair snaps the three-day losing streak during the early European session on Friday. The major pair recovers despite the renewed US Dollar (USD) demand. Market players will take more cues from the Eurozone inflation data due later in the day. At press time, EUR/USD is trading at 1.0811, gaining 0.03% on the day.

Eurozone inflation declined further last month, triggering speculation for the European Central Bank (ECB) to start lowering interest rates from record highs later this year. Next week, the ECB will announce its interest rate decision on March 7, with no change in rate expected. The ECB is expected to cut its forecasts for inflation and growth at its March meeting while emphasizing the need for further data to ensure that growing wages do not cause price pressures before cutting borrowing rates.

The US January Personal Consumption Expenditure (PCE) Price Index was in line with expectations, with the headline PCE at 2.4% YoY and the Core PCE at 2.8% YoY. The report confirms that the US inflation rate is continuing to decelerate further. However, Federal Reserve (Fed) officials are likely to wait for more inflation data and still have no reason to hurry into cutting rates. Meanwhile, the escalating geopolitical tensions in the Middle East would also likely favor safe-haven assets like the US Dollar (USD).

Market participants await the first reading of the Eurozone Harmonized Index of Consumer Prices (HICP) for February and the US ISM Manufacturing PMI, due on Friday. Next week, the ECB interest rate decision will be in the spotlight. These events could give a clear direction to the EUR/USD pair.