The EUR/USD currency pair remained largely stagnant in early trading, fluctuating around the 1.1660 level amid subdued market activity. Investors adopted a cautious stance ahead of the release of the United States Consumer Price Index (CPI), which is a key indicator of inflationary pressures and potential Federal Reserve policy adjustments. Meanwhile, geopolitical developments and geopolitical tensions continued to influence market sentiment, with the US administration taking notable actions on the international stage.
Recent geopolitical tensions intensified when the US announced new tariffs targeting countries that do business with Iran. The tariffs, set at a rate of two percent, are effective immediately and apply broadly to transactions involving Iran. This move comes amid ongoing diplomatic fallout and trade uncertainties, adding to the unpredictability faced by traders and investors.
On the economic front, US CPI data showed an annual inflation rate of 2.7%, with monthly figures at 0.3%, aligning with market expectations. Core inflation, which excludes volatile energy and food prices, increased by 2.6% annually and grew by 0.2% month-over-month, slightly below forecasts. The data underwhelmed some market participants, exerting only modest pressure on the US dollar and failing to provoke more significant shifts in the major currency pairs. The dollar’s corrective movements remain limited as the market digests the data within a broader context of ongoing geopolitical concerns.
Technical analysis indicates a neutral to slightly bearish short-term outlook for EUR/USD . On a four-hour basis, the pair is trading around the 20-period simple moving average, which is trending below longer-term SMAs, suggesting short-term weakness. Momentum indicators suggest a modest recovery but lack the momentum necessary for a decisive move higher. Resistance levels are identified near the 1.1693 mark at the 200 SMA and around 1.1724 at the 100 SMA. Conversely, the daily chart shows signs of downside risk, with the 20-day SMA trending downward while still remaining above longer-term SMAs, indicating limited bullish potential and the possibility of continued consolidation in a narrow range.
