EUR/USD climbs above 1.1400 for the first time in three months

• In the New York session, the euro is gaining 0.44%.
• Fed’s Chief Jerome Powell said that the US central bank would use its tools to tackle inflation.
• US inflation figures aligned with expectations but boosted the EUR instead of the USD.

On Wednesday,  as the North American session begins, the euro surges against the greenback, on the back of US inflation figures, which came in line with expectations, though weighed on the US dollar. Per the market’s reaction, it appears a “buy the rumor, sell the fact” event, as the EUR/USD exchanges hands at 1.1416 at the time of writing.

On Tuesday, Fed’s Chief Jerome Powell, who has been renominated for the job by US President Joe Biden, appeared at the US Senate. Over there, he said that the US economy does not need to be accommodative, and when asked about inflation, Powell emphasized that “if we have to raise interest rates more over time, we will.” It is worth noting that the Fed’s Chief stated that the Federal Reserve should focus more on elevated prices than on achieving the maximum employment goal, though the importance of the US CPI reading, on the day.

US Consumer Price Index (CPI) came within forecasts

In the meantime, the US Bureau of Labor Statistics (BLS) revealed that the Consumer Price Index (CPI) for December rose by 7.0%, as foreseen by analysts on its annual reading. Excluding volatile items like food and energy prices, the so-called Core CPI increased annually by 5.5%, a tenth up from the estimated 5.4%, close to expectations.

In the overnight session for North American traders, the Eurozone economic docket revealed the Industrial Production for the Euro area. Industrial Production rose 2.3% on its monthly reading but fell 1.5% on an annual reading, per Reuters reported.

EUR/USD Price Forecast: Technical outlook

In the EUR/USD daily chart, the euro finally trades above the 1.1386 strong resistance level for the first time since November 15, 2021. The breach of the trading range maintains EUR bulls hopeful of launching an attack towards an eight-month-old downslope trendline, drawn from May 2021, cycle highs, that the EUR/USD would face around the 1.1440-60 area. Once that level is broken, the next ceiling level would be the confluence of the 100-day moving average (DMA) and the 1.1500 psychological level.

Contrarily on the downside, the EUR/USD first support would be the January 11 daily high, previous resistance-turned-support, at 1.1375, followed by the 50-DMA at 1.1338 and then the 1.1313.