EUR/USD bears take out key lows, breaking below 1.0570 so far

• EUR/USD bears pile in and burn stubborn bulls. 
• Euro shorts are moving in on 1.0570 as US Dollar firms. 

EUR/USD slid on Tuesday to a low of 1.0573 but that was not the whole story. Earlier in the day, the Euro found bids on the back of higher-than-expected French inflation data, which sent short-dated euro zone yields to their highest in at least a decade. Then, at the start of the US day, the pair rallied to 1.0645 when US data showed signs that the Fed's rate hikes were beginning to have their intended effect and in contrast to a slew of prior inflationary outcomes. 

''Base effects from last year’s Russian invasion of Ukraine should start to bring annual inflation down from March, but the ECB will be primarily concerned with sequential monthly inflation increases,'' analysts at ANZ Bank said. ''German and euro area inflation data will be released in coming days and will provide a more complete inflation backdrop for the March Governing Council meeting.''

Meanwhile, the US Dollar was weighed when US Consumer Confidence unexpectedly fell in February, dropping to 102.9 from a 106 reading in January, well below the forecasted 108.5. On top of that, the S&P CoreLogic Case Shiller national home price index rose just 5.8% year-on-year but dropped 0.5% in December while the Chicago PMI business survey for February also came in weaker-than-expected.

Looking ahead, the US Nonfarm Payrolls employment data for February on March 10 and then the Consumer Price Index on March 14 will be key drivers in terms of the expectations over the Fed's interest rate policy. Meanwhile, for the immediate future, ISM manufacturing PMI should continue reflecting the fragility of the sector in February (market f/c: 45.5) while the final estimate to the S&P Global manufacturing PMI will likely confirm this too, analysts at Westpac said. ''Meanwhile, construction spending is expected to remain subdued in January given softening demand (market f/c: 0.2%). Minneapolis Federal Reserve president Neel Kashkari is also due to speak.''