EUR/USD rises toward 1.0900 after US Core PCE

• US February Core PCE inflation comes in at 4.6%, below 4.7% expected.
• US yields hits fresh daily lows, US Dollar weakens.
• EUR/USD erases most of it day’s losses after numbers.

The EUR/USD rose from 1.0866 to 1.0895 following the release of US Core Consumer inflation that came in slightly below expectations. The figures weighed on the US Dollar that lost ground across the board.

The Core Personal Consumption Expenditures Price Index rose 0.3% in February, less than the 0.4% of market consensus to an annual rate of 4.6%, below the 4.7% of January. The PCE Price Index rose 0.3% in February and 5% YoY. The same report showed that Personal income grew by 0.3%, above the 0.2% expected while Personal Spending rose by 0.5%, surpassing consensus of 0.3%

The numbers showed consumer inflation in the US falling slowly. The February core CPE matched the lowest reading in 15 months. Those numbers could be welcome by the Fed, but still shows inflation remains elevated. The Chicago PMI and University of Michigan’s Consumer Confidence will be released later on Friday.

In the Eurozone, the Harmonised CPI came in softer at 6.9% YoY in March, down from 8.5%, below expectations of a drop to 7.1%. The Core CPI steadied at 5.7% YoY.

The US Dollar fell moderately across the board after the report as US yields sank. The 10-year Treasury yield fell from 3.54% to 3.51%, the lowest since Tuesday. The DXY is still up for the day, but it moved off highs.

The EUR/USD moved to the upside, approaching 1.0900. Still it remains below that relevant area. Earlier it peaked at 1.0925, before turning to the downside. It bottomed at 1.0863. On a weekly basis, the pair is heading toward the highest close in a year.

In the short term, the pair is moving with a bullish bias but is being unable to break the 1.0925/30 resistance and shows difficulties holding above 1.0900. Downward correction could find support at 1.0855/60 and 1.0820.

Technical levels