German CPI Preview: What to expect of EUR/USD?

The EUR/USD pair is trading neutral around 1.07 handle, having retraced the rally to 1.0740, as the greenback enters a phase of consolidation versus its main competitors, in wake of recent sell-off.

Attention now turns towards the German CPI report due at 1300GMT for fresh impetus on the EUR.

Mixed regional y/y CPI readings sends mixed signals for nationwide print

The German inflation data is up for release later this session, with the CPI figures expected to decline to -0.6% in Jan, versus +0.7% growth seen a month ago, while adding 2.0% annually, compared to the 1.7% result reported in Dec.

Germany's regional CPIs released earlier today painted a mixed picture of the harmonized German CPI report, with Brandenburg inflation for the month of Jan MoM coming in at -0.7% vs +0.1% prev, while the YoY was unchanged at +1.7%. In Hesse, MoM came in at -0.5% versus +0.9% prev, while YoY rose +2.4%, versus +1.9% prev. Meanwhile, in Bavaria, the MoM came in at -0.8% vs 0.7% prev, with YoY staying flat at +1.7%. 

However, the German CPI report is expected to have significant impact on the EUR/USD pair, and could bring the EUR out of the range trade seen around 1.0700 levels over the last hours.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet notes, “Technically, the EUR/USD pair 4 hours chart shows that the price is back below a modestly bearish 20 SMA, whilst indicators hold within negative territory, but lacking directional strength. In the same chart, the price is a few pips below a daily ascendant trend line coming from 1.0340, January low, still unable to confirm a bearish breakout.

“The immediate support comes at 1.0650, from where the pair bounced a couple of times last week. Below it, 1.0610 and 1.0565 are the next possible bearish targets. A recovery above 1.0710 on the other hand, can see the pair advancing up to the 1.0740/60 region, where a bearish 100 DMA should cap the upside.”