EUR/USD remains at four-week lows after Eurozone inflation data, awaiting NFP

• The euro without reaction to the inflation data of the Eurozone.
• The US employment report is coming with non-farm payrolls.
• Inflation confirms slowdown, US employment report is coming.
• EUR/USD under bearish pressure in area of ​​lows in four weeks

EUR/USD extended the pullback and fell to 1.0496, the lowest level since December 8. The pair returned above 1.0500 and remained close to that level after the Eurozone inflation data.

The pair is moving with a bearish bias. If firm below 1.0500, next firm support is seen at 1.0445. On the upside, at 1.0540 the first resistance appears, followed later by 1.0590.

Low inflation, but not core inflation

The Eurozone Consumer Price Index rose at an annual rate of 9.2% in December, representing a decline from 10.1% in November, below the 9.7% market consensus. The preliminary report showed that the core index increased 0.6% in the month, against an expected drop of 0.1% and rose 5.2% from a year ago, a record level.

The drop in inflation was expected after the data in several countries, including Germany, which did not generate much surprise. The underlying index for its part is an alarm signal that is still in the red and that puts pressure on the European Central Bank.

A different report showed that retail sales in the Eurozone increased 0.8% in December, beating expectations for a 0.5% increase.

The euro continued with some strength in the market after the data, sustaining the gains against the Swiss franc and the pound. EUR/USD didn’t react much and held near 1.0500, where it is trading.

The focus is now on the official US employment report (NFP). The market consensus is for an increase in non-farm payrolls of 200,000 and for the unemployment rate to remain at 6.7%. The dollar comes strengthened to the event after the latest economic reports, including the ADP employment that exceeded expectations on Thursday.

technical levels