The European currency has given up some recent gains and briefly tested the 1.0680 region as Italy’s Industrial Production falls short of expectations. The US CPI report is also awaited in the NA session.
EUR/USD Corrects Lower as Italy’s Industrial Production Falls Short of Expectations
The EUR/USD currency pair has been on a roller coaster ride recently, with investors closely watching economic indicators and central bank policies on both sides of the Atlantic. On Tuesday, the euro lost some ground as it retreated to the 1.0680/75 range, facing initial resistance at this level.
The decline in EUR/USD came as Italy’s Industrial Production data for January surprised to the downside, falling by 2.2% compared to a consensus forecast of a 0.8% decline. This was the biggest drop in industrial output since April 2020 and reflects the impact of COVID-19 restrictions on the manufacturing sector in Italy.
The news weighed on the euro, which had been rallying against the US dollar in recent weeks, as investors worried about the potential economic impact of extended lockdowns and the slow pace of vaccination in the eurozone. Italy, which has been one of the worst-hit countries by the pandemic, has struggled to contain the spread of the virus and its economy has suffered as a result.
US CPI Report in Focus
Meanwhile, the US dollar was also under pressure on Tuesday, ahead of the release of the US Consumer Price Index (CPI) report for February. The CPI is a key measure of inflation in the US economy and is closely watched by investors as it can influence the Federal Reserve’s monetary policy decisions.
The market expects the US CPI to rise by 0.4% in February, which would be the biggest increase since August 2012, largely due to a surge in energy prices. However, some analysts believe that the actual figure could be higher, which could spark concerns about inflation and lead to a sell-off in the US dollar.
Conclusion
In conclusion, the EUR/USD currency pair has been volatile in recent sessions as investors react to economic data releases and central bank policies. The decline in the euro on Tuesday was driven by disappointing Industrial Production data from Italy, which has been struggling to contain the spread of COVID-19 and its impact on the economy.
Looking ahead, the US CPI report will be closely watched in the North American session, as it could have a significant impact on the US dollar and global financial markets. Investors will be looking for any signs of inflationary pressures, which could prompt the Federal Reserve to adjust its monetary policy stance.
As always, it’s important for traders to remain vigilant and adapt to changing market conditions, by keeping a close eye on economic indicators and staying up-to-date with the latest news and analysis.