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EURUSD Analysts Expect a New Inflation Cycle in the EU

2/9/2023 12:00 PM

Against poor macroeconomic statistics, the EUR/USD pair is moving in a corrective trend at 1.0730.

German industrial production lost 3.1% in December after rising 0.4% last month. Analysts expected a significant drop in retail sales in Italy by 0.8%, but the figure corrected only by –0.2% at the end of the year – up to 3.4% from 4.4%. Today, investors expect the publication of data on the German consumer price index in January: preliminary estimates suggest an acceleration in inflation to 8.9% from 8.6% earlier. The active dynamics in the asset could not be stopped by the increase in the interest rate of the European Central Bank (ECB) last week by 50.0 basis points, which indicates the unstable state of the German economy.

In turn, the USD Index is holding around 103.200 due to the lack of macroeconomic publications. Yesterday, investors' attention was drawn only to the rate on 30-year mortgage loans from the Mortgage Lending Association (MBA), which slightly decreased to 6.18% from 6.19% earlier, which had almost no effect on the market.

On the daily chart, the trading instrument continues its corrective movement, declining towards the support line of the ascending corridor.

Technical indicators are preparing a full downward reversal: fast EMAs on the Alligator indicator are approaching the signal line, and the AO histogram forms downward bars, reaching transition levels.

Resistance levels: 1.0800, 1.0990. | Support levels: 1.0670, 1.0520.

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