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EUR\/USD corrects to near 1.0890 in North American\u00a0trading hours on Wednesday after the release of the United States<\/a> (US)\u00a0Consumer Price Index<\/a> (CPI) report\u00a0for February, which\u00a0showed that inflationary pressures grew at a slower-than-expected pace. The major currency pair drops as the US Dollar (USD) gains despite the lower-than-anticipated increase in US inflation, which is expected to boost market expectations that the Federal Reserve (Fed) will cut interest rates in the May policy meeting.<\/p>\n Year-over-year headline inflation data\u00a0decelerated at a faster pace\u00a0to 2.8% from the estimates of 2.9% and a\u00a03% increase seen in January. In the same period, the core CPI \u2013 which excludes volatile food and energy prices \u2013 rose by 3.1%, slower than expectations of 3.2% and\u00a0the prior release of 3.3%. The month-on-month headline and core CPI grew at a moderate pace of 0.2%, compared to estimates of 0.3%.<\/p>\n The US Dollar Index<\/a> (DXY), which tracks the Greenback\u2019s value against six major currencies, rises to near 103.75 from the four-month low of 103.20 posted on Tuesday.<\/p>\n The US Dollar (USD) had\u00a0been underperforming for the past few weeks as US President Donald\u00a0Trump\u2019s tariff agenda has dampened the economic outlook<\/a>. Market participants expect Trump\u2019s \u201cAmerica First\u201d policies to boost inflationary pressures, eventually diminishing the purchasing power of households already battling high inflation.<\/p>\n On Tuesday, fears of a US recession escalated after comments from US Commerce Secretary Howard Lutnick in a CBS interview\u00a0indicated that policies by the President are worthwhile despite the prompted fears of a recession. Lutnick said, \u201cThese policies are the most important thing America has ever had, and they are worth it\u201d after being asked whether it would be worth executing Trump\u2019s policies even if they led to a recession.<\/p>\n <\/a><\/p>\n EUR\/USD<\/a>\u00a0drops\u00a0to near 1.0890 in Wednesday’s North American session\u00a0from the five-month low of 1.0920 posted\u00a0on Tuesday. The long-term outlook of the major currency pair is bullish as it holds above the 200-day Exponential Moving Average (EMA), which trades around 1.0650. Last week, the major currency pair showed a strong upside move\u00a0after a decisive breakout above the December 6 high of 1.0630.<\/p>\n The 14-day Relative Strength Index (RSI) holds to near 70.00, indicating a strong bullish momentum.<\/p>\n Looking down, the December 6 high of 1.0630 will act as the major support zone for the pair. Conversely, the psychological level of 1.1000\u00a0will be the key barrier for\u00a0the Euro\u00a0bulls.<\/p>\n Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics<\/a>. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.<\/p>\nDaily digest market movers: EUR\/USD remains broadly firm\u00a0on German defense spending deal,\u00a0Ukraine\u00a0ceasefire<\/h2>\n
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Technical Analysis: EUR\/USD \u00a0stabilize above\u00a01.0900<\/h2>\n
Economic Indicator<\/h2>\n
Consumer Price Index (YoY)<\/h3>\n