Daily Technical Analysis EUR/USD: Pair Rises Above 1.0400 Ahead of EU Inflation Data

The EUR/USD halted its three-day decline, trading near 1.0410. The pair’s recovery is supported by a softer US Dollar (USD) following the release of January’s Personal Consumption Expenditures (PCE) inflation data, which aligned with expectations and eased concerns about unexpected inflation spikes in the US.

US Inflation Data Eases Market Worries

The PCE inflation report met forecasts, with the monthly headline PCE holding steady at 0.3%. Core PCE edged up to 0.3% from December’s 0.2%, while the annual headline PCE stood at 2.6%, slightly exceeding expectations but unchanged from December’s figure. Core PCE, a key metric watched by the Federal Reserve, eased to 2.6%, down from a revised 2.9% in December.

Following the data, the US Dollar Index (DXY) weakened after three consecutive sessions of gains, hovering around 107.30 at the time of writing. However, the Greenback’s downside may be limited as US Treasury yields remain firm, with the 2-year yield at 4.02% and the 10-year yield at 4.24%.

US-China Trade Tensions Could Limit EUR/USD Upside

Rising geopolitical tensions could cap EUR/USD’s gains, as escalating US-China trade disputes bolster safe-haven demand for the US Dollar. Over the weekend, US President Donald Trump announced an additional 10% tariff on Chinese imports starting Tuesday, adding to the previous 10% rate imposed last month. Trump also confirmed on Truth Social that 25% tariffs on Canadian and Mexican goods will take effect on March 4.

Euro Gains on Strong German Inflation Data

The Euro (EUR) finds support after Germany’s February flash Harmonized Index of Consumer Prices (HICP) data came in stronger than expected on Friday. Despite the recent inflation report showing higher numbers, the European Central Bank (ECB) is still anticipated to proceed with easing its monetary policy in Thursday’s meeting. Investors are now focusing on the upcoming Eurozone HICP inflation data, which is set to be released later today.

EUR/USD Daily Technical Analysis for March 3rd

The daily chart of the EUR/USD shows that sellers are limiting the pair’s bullishness just above a flat 20-day SMA at the 1.0415 level. In addition, the 100-day SMA level has acted as dynamic resistance throughout the entire week against the bullish bids at the 1.0530 level. Technical indicators are neutral to bearish. Momentum is just above the 100 level, while the RSI is around 47, indicating limited buying pressure. Furthermore, EUR/USD continues to see a sequence of lower lows and lower highs, confirming the general downtrend.