The EUR/USD is rising today after the relatively strong German inflation numbers. The pair is trading at 1.2132, which is substantially above Friday’s low of 1.1955.
German strong inflation data
Germany has been deeply affected by the coronavirus pandemic. However, unlike other countries, its important automobile industry has done relatively well because of the rising demand from Asia.
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In fact, data released yesterday showed that the German exports increased by 0.1% in December, pushing the trade surplus to more than 16.1 billion euros.
Today, data by the statistics bureau showed that the country’s headline consumer price index (CPI) rose by 0.8% in January from 0.5% in the previous month. This led to an annualised increase of 1.0% after falling by 0.3% in December.
Similarly, the harmonised index of consumer prices rose by 1.4% leading to an annualised increase of 1.6%. The statistics agency said:
“The reduced tax rate only continues to apply to restaurants and catering services. The fact that the higher tax rates since January 2021 have been passed on to the consumers is one reason for the increase in consumer prices.”
Elsewhere, in Norway, data showed that the headline CPI rose by 2.5% while core CPI rose by 2.7%.
Looking ahead, the EUR/USD will react to the inflation numbers from the United States that will come out later today. Economists expect the data to show that the headline consumer price index rose by 1.5% in January. They also see the core CPI rising by about 1.6%.
Analysts believe that the US CPI will rise to the Fed’s target of 2.0% later this year. However, the Fed has already hinted that it will not tighten its interest rates even after they move above 2.0%. The pair will also react to the US stimulus talks that are going on in Washington.
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EUR/USD technical outlook
On the four-hour chart, we see that the EUR/USD is approaching the 23.6% Fibonacci retracement level. It has also moved above the first support of the Andrews Pitchfork tool, signaling that bulls are in control. Also, the pair has risen above the descending trendline. Therefore, the pair will likely continue rising as bulls target the next major resistance at 1.2200.