Robust US statistics and easing inflation limit EURUSD growth

The EURUSD rate is testing the 1.0310 resistance level. Find out more in our analysis for 20 January 2025

EURUSD forecast: key trading points

• The EURUSD pair is rising on Monday morning amid expectations of Donald Trump’s political statements
• US retail sales increased by 3.9% year-on-year in December, while their growth in November was 4.1%
• US industrial production surged by 0.9% in December, marking the highest level since February
• EURUSD forecast for 20 January 2025: 1.0260 and 1.0175

Fundamental analysis

The EURUSD rate is rising on Monday amid expectations of Donald Trump’s political statements after the inauguration. Buyers could protect the crucial support level at 1.0265. However, the currency pair remains within a downtrend. Market participants are following the US President’s plans to introduce new tariffs, stricter immigration policy, tax cuts, and deregulation, which are expected to increase inflationary pressures.

Last week, the US dollar strengthened due to an unexpected slowdown in core inflation. Additionally, weaker PPI and retail sales data reinforced speculation about the Federal Reserve interest rate cut this year.

Retail sales rose by 3.9% year-on-year in December, with revised data showing a 4.1% increase in November. This economic segment accounts for roughly a third of all consumer spending, contributing to 70% of the US GDP.

At the same time, US industrial production in December rose 0.9% from November, marking the highest reading since February. Analysts expected a 0.3% increase.

EURUSD technical analysis

EURUSD quotes have reached the upper boundary of the Triangle pattern. Today’s EURUSD forecast suggests that the price could rebound from the 1.0310 resistance level and decline to 1.0175. A rebound from the resistance level on the Stochastic Oscillator will provide an additional signal for a downward movement in the currency pair.

The bearish impulse will be confirmed by a breakout below the lower boundary of the Triangle pattern, with the price securing below 1.0260. Conversely, price consolidation above 1.0335 will invalidate the bearish scenario, indicating a breakout above the pattern’s upper boundary and paving the way for growth to 1.0395.

Summary

Despite the downtrend, the EURUSD rate is rising amid Donald Trump’s announced decisions, which could increase inflation. However, the strengthening of the euro may be limited by easing core inflation and strong US industrial production figures. The EURUSD technical analysis indicates a potential decline to 1.0175 in case of a breakout below the lower boundary of the Triangle pattern, with the price securing below the 1.0260 level. However, price consolidation above 1.0335 may invalidate the bearish scenario, leading to growth to 1.0395.