The EUR/USD currency pair has shown resilience recently, recovering to around 1.0300 as of mid-European trading on a Wednesday. This positive momentum has been bolstered by a mixture of strong earnings reports from major US banks and a more favorable outlook on US inflation data. Earlier in the day, optimism surged as leading financial institutions posted impressive results, including Goldman Sachs, which reported its profits had doubled in the fourth quarter, and JP Morgan, which highlighted significant growth in asset and wealth management services.
Ahead of the crucial US Consumer Price Index (CPI) report, market sentiment leaned towards caution but was ultimately uplifted by these earnings announcements. The Eurozone’s economic indicators, however, presented a mixed picture, with November’s Industrial Production figures revealing only a modest increase of 0.2% from the previous month, falling short of the 0.3% expectations. On an annual basis, the production was down 1.9%, a larger drop than the previous month’s 1.1% decline, though in line with forecasts.
Following the release of US inflation data, which came in below prior expectations, the EUR/USD pair gained further ground. The annual CPI for December indicated a 2.9% increase, aligning with estimates, while the core inflation reading was 3.2%, slightly under the anticipated 3.3% and down from the previous 3.4%. This development provided additional support for the EURO against the dollar.
From a technical standpoint, the daily chart reveals that the EUR/USD is trading below a bearish 20 Simple Moving Average (SMA), which is acting as a resistance point near 1.0350. Indicators suggest that, while there is resistance at higher levels, the near-term outlook is cautiously optimistic as the pair navigates above its 4-hour chart’s supportive trends. Key support levels stand at 1.0285, 1.0240, and 1.0190, while resistance is found at 1.0350, 1.0385, and 1.0410. The pair’s ability to break through these resistance points will be crucial for its potential to rally further.
