EUR/USD retreats after hitting daily high aims toward 1.0800

• EUR/USD falls 0.29% after US PCE inflation report shows expected slowdown, reversing early gains.
• Soft German inflation and lower Eurozone yields contribute to the pair's decline from daily highs.
• Fed officials' comments on future rate cuts influence market sentiment, with focus on economic data.

The EUR/USD reversed its course on Thursday after a report in the United States (US) witnessed a minimal jump in inflation, which initially triggered a rally to a daily high of 1.0855. However, the advance was short-lived as the pair exchanged hands at 1.0807, tumbling 0.29%.

EUR/USD drops as EU's yields fall and German inflation report weighs

The latest inflation report of the US Bureau of Economic Analysis (BEA) revealed the Personal Consumption Expenditure (PCE) Price Index slowed from 2.6% to 2.4% YoY as expected, reported on Thursday. Besides that, the Federal Reserve's preferred gauge for inflation, the Core PCE, which excludes volatile items, increased by 2.8% YoY, below December’s 2.9%, and aligned with the consensus.

The data sponsored a leg-up in the EUR/USD pair, breaking key resistance at the 200-day moving average (DMA) at 1.0828 towards the daily high. Nevertheless, yields dropping across the Eurozone (EU) and a soft inflation report from Germany during the European session dragged the exchange rate toward current levels.

Housing data from the US was revealed by the National Association of Realtors, with Pending Home Sales dropping from 5.7% MoM in January to -4.9%. at the same time, the Chicago PMI in February came at 44.0, below the consensus of 48.0 and the previous reading of 46.

Fed speakers grab the headlines

In the meantime, Atlanta’s Fed President Raphael Bostic commented that economic data should guide the Fed on when to begin to start rate cuts, which, according to him, could happen in the summer. Bostic acknowledged that inflation is slowing down, but they have to stay “vigilant and attentive.”

Chicago’s Fed President Austan Goolsbee said that policy is restrictive, and the question is, “How long do we want to remain restrictive.”

EUR/USD Price Analysis: Technical outlook

The swing of the EUR/USD on Thursday has opened the door for bears to push prices below the 200 and 100-DMAs, along with a break of a support trendline. A breach of the latter could sponsor a pullback all the way towards the October 3 low of 1.0448. On the other hand, if buyers cling to the 1.0800 area, the major could consolidate within the 1.0800-1.0850 range.