EUR/USD regains some ground, but remains hobbled by key technicals

• EUR/USD recaptured a scant 0.2% on Wednesday, but upside remains limited.
• US inflation metrics rule the roost this week as prices rise faster than expected.
• US PPI inflation will follow up Wednesday's unexpected CPI upswing.

EUR/USD churned on Wednesday, testing the low end through most of the intraday session before breaking higher after investors tried to shake up an unexpected upswing in US Consumer Price Index (CPI) inflation. The key dataprint on Thursday will be US Producer Price Index (PPI) inflation, as European economic data takes a backseat this week.

Final Harmonized Index of Consumer Prices (HICP) figures from Germany are due on Thursday, but the non-preliminary print is unlikely to drive much volatility with the numbers well-forecast and fully priced in already. Headline German HICP inflation is expected to hold at 2.8% for the year ended in January.

Forex Today: Further US inflation gauges should rule the sentiment

In January, US CPI saw a notable increase, with the headline CPI inflation rising to 3.0% year-over-year, a bit higher than the expected 2.9%. The most significant portion of this increase came from the nearer end of the tail, where the month-over-month CPI came in at 0.5%. It's interesting to note that markets had anticipated a month-over-month headline CPI of 0.3%, especially considering the previous figure was 0.4%. 

On Thursday, core US PPI inflation is expected to take center stage. The median market forecasts suggest a slight decline to 3.3% year-over-year, down from 3.5%. However, the inflation uptick on Wednesday has made investors a bit uneasy, raising concerns about inflation becoming more deeply rooted in the US domestic economy.

EUR/USD price forecast

EUR/USD continues to churn in an uneasy pattern, wavering just south of the 50-day Exponential Moving Average (EMA) near,1.0425. Fiber is pinned beneath the key technical average, but short-sellers are having a difficult time developing momentum with a technical floor priced in near 1.0300.

EUR/USD daily chart