EUR/USD Bulls Face Resistance as Technical Indicators Provide Mixed Signals
EUR/USD edged higher but faced resistance amid conflicting fundamental and technical signals. The pair’s bullish momentum was supported by a rebound from key support at 1.0317, where buyers stepped in after an initial drop following higher-than-expected U.S. CPI data. A bullish hammer on both the daily and monthly charts strengthens the case for further upside, while RSI readings continue to trend higher, indicating growing bullish momentum. The pair has managed to break above its 21-day and 55-day moving averages, reinforcing the bullish structure. Additionally, the price is testing the lower boundary of the Ichimoku cloud, suggesting a potential shift in trend if EUR/USD sustains gains above 1.0430 on EBS. However, failure to hold above this level could invite fresh selling pressure.
The U.S. yield curve remains a critical factor, as 2-year and 5-year breakevens surged, signaling that inflation expectations are still running hot. This could pressure the Fed to maintain a restrictive policy stance, which in turn might strengthen the dollar and cap EUR/USD gains. From a technical perspective, a decisive break above 1.0430 would shift the focus to 1.0500, where strong resistance is located. Conversely, a failure to hold above the daily cloud base could trigger a pullback towards 1.0350, with 1.0317 acting as critical support.
Looking ahead, traders will watch U.S. weekly jobless claims and January PPI for further clues on inflation trends. A stronger-than-expected PPI print could reinforce the Fed’s hawkish stance, driving the dollar higher and pressuring EUR/USD lower. On the other hand, any signs of cooling price pressures could boost risk sentiment and support further gains. While geopolitical factors such as Powell’s fiscal comments and tariff discussions have helped stabilize risk assets, traders remain cautious as U.S. data could drive further volatility.