EUR/USD: An inflation report that doesn't change the dynamic

In the US, the sharper-than-expected slowdown in inflation in November has revived expectations of monetary easing by the FED. This apparent easing of price pressures reinforces the idea that the peak of restrictive measures is now behind us. Nevertheless, the significance of these figures should be put into perspective: the prolonged shutdown of the federal government disrupted data collection, particularly for certain key components of the index, introducing a considerable bias into the economic analysis. In this context, the Fed remains committed to a wait-and-see approach, seeking to avoid any premature reaction based on imperfect statistics.

In the eurozone, the message delivered by the European Central Bank is one of stability and flexibility. Key interest rates have been kept unchanged, and the institution considers its monetary policy to be at a level compatible with a gradual return of inflation to its target. The revised projections reflect a scenario of moderate but resilient growth, in an environment still marked by geopolitical and trade uncertainties. Recent statements from members of the Governing Council confirm that no predetermined path has been set: neither a decline nor an increase is favoured at this stage, which limits the euro's ability to appreciate sustainably on a monetary policy differential.

In Asia, the Bank of Japan's decision to raise its key interest rate, widely anticipated by the markets, had only a marginal impact on major currency pairs. The cautious tone adopted by the institution, combined with the lack of clear indications regarding the continuation of the tightening cycle, kept the yen under pressure.

Today, currency traders will be watching the Michigan Consumer Sentiment Index, due at 16:00 (EU time).

From a technical perspective, the pair is currently in a very short-term consolidation phase. This pause appears constructive and more akin to a breathing phase than a reversal signal. The 20-day moving average continues its upward trend and is gradually supporting prices. As long as the euro remains above this dynamic zone, the preferred scenario remains a resumption of the upward movement, with a technical structure that remains favorable for continued appreciation in the medium term.

MEDIUM-TERM FORECAST
Based on the key technical factors we have mentioned, our outlook for the EUR/USD pair is positive in the medium term.

Our entry point is at $1.1712. The price target for our bullish scenario is $1.1830. To protect your capital, we advise placing a stop-loss order at $1.1386.

The expected profit for this forex strategy is 118 pips, and the potential loss is 326 pips.