FX.co ★ Forecast for EUR/USD on February 24. Inflation in the European Union continues to grow

Yesterday, the EUR/USD pair continued to decline. The quotes accomplished consolidation both under the downward trend line and the corrective level of 161.8% (1.0614). As a result, traders' sentiment may still be described as "bearish," and the decline can still go down to the level of 1.0483. Also, I want to point out how weak the fall is right now.

Only one noteworthy report was released in the United States and the European Union yesterday. This is GDP in the second estimate for the fourth quarter in the United States and inflation in the final value for January in the European Union. Let's take a closer look at them. In January, the consumer price index dropped from 9.2% y/y to 8.6% y/y. This analysis appears to be conclusive, and the decline of the euro's value is simple to comprehend. After all, if inflation decreases, the ECB is on the correct path in raising rates and will eventually succeed in its target. The core inflation indicator, which ignores fluctuations in the price of food or energy, should also be taken into consideration. Let me remind you that throughout the past year, energy prices have shown utterly irrational movements. I do not rule out the possibility that global inflation increased initially as a result of rising oil and gas prices and subsequently started to decline as a result of falling oil and gas prices. Hence, underlying inflation shows no signs of abating. This indicator has never slowed down since the European regulator started a tightening policy, and the growth was from 5.2% to 5.3%. So, in my opinion, the euro should have increased yesterday rather than continuing its gradual drop. Since this is the report's second evaluation, traders may have accounted for these developments two weeks ago. Whatever it was, the pair's chances of falling continued to be greater than their chances of growing.

The pair was held under the upward trend area on the 4-hour chart. Because the pair left the c where they had been since October, I believe this moment to be of utmost importance. The current "bearish" trading sentiment provides the US currency with outstanding growth possibilities with a target of 1.0201. The "bullish" divergence that is developing in the MACD indicator may temporarily halt the decline in prices, but it has not yet been established and may end up being canceled.

Report on Commitments of Traders (COT):

Speculators opened 9,464 long contracts and 2,099 short contracts during the most recent reporting week. Major traders' attitude is still "bullish" and has somewhat improved. Currently, 238 thousand long futures and 103 thousand short contracts are all concentrated in the hands of traders. The COT figures show that the European currency is now growing, but I also see that the number of long positions is over 2.5 times greater than the number of short positions. The likelihood of the euro currency's growth has been steadily increasing over the past few months, much like the euro itself, but the information background hasn't always backed it up. After a protracted "dark time," the situation is still favorable for the euro, therefore its prospects are still good. Until the ECB gradually raises the interest rate by increments of 0.50%, at least.

News calendar for the USA and the European Union:

US - basic price index of personal consumption expenditures (13:30 UTC).

US - income and expenses of individuals (13:30 UTC).

US - consumer sentiment index from the University of Michigan (15:00 UTC).

On February 24, there are no significant economic events on the European Union's calendar, and there are a few reports that are not the most significant in the USA. The knowledge backdrop may not have much of an impact on the traders' attitudes today.

Forecast for EUR/USD and trading advice:

When the pair closes below the level of 1.0610 on the 4-hour chart, new sales of the pair with a target price of 1.0483 are probable. On the hourly chart, buying the euro currency is conceivable if it closes above the level of 1.0614 with a target of 1.0750.