Continuity of EURUSD uptrend depends on this week's statistical data

EURUSD is trading near 1.0930 as the dollar remains stable ahead of the release of US inflation data. The report could have an impact on the future monetary policy of the US Federal Reserve.

In the currency market, the dollar remains in the lead. The US currency index rose 1% this month after falling 2% in December. Traders are trying to assess the scale and depth of Fed's rate cuts.

The dovish stance of the financial regulator in December last year strengthened market participants' expectations for lower interest rates. Investors expected a 160 basis point cut this year. They have since revised their forecasts and now anticipate a 140 basis point rate cut in 2024.

According to the CME FedWatch tool, market participants are pricing in an about 64% chance of a rate cut by the Fed in March.

Meanwhile, the European Central Bank is set to cut interest rates this year, reaffirmed a Governing Council member Francois Villeroy de Galhau. However, there wasn't any more specific guidance on how soon that could be.

In his traditional address, Villeroy noted the effectiveness of the ECB's measures last year to fight inflation. But he also highlighted that officials should maintain vigilance and not commit to a specific date. 

Further decisions of the European regulator will be determined by the consumer price index in the region. According to Villeroy, the main reason for easing monetary policy will be signs of consolidation of the inflation target of 2%. 

In December, the level of consumer prices in the eurozone rose by 2.9% on an annualized basis. A month earlier its values were at 2.4%. Such growth could be partly due to the base effect, the politician said.

The EURUSD pair is forming an upward corrective trend on the H4 timeframe. The divergence of the Stochastic Oscillator indicator (standard values) indicates a possible change in the direction of the currency pair movement towards growth.

Signal:

The short-term outlook for the EURUSD pair is to buy.

The target is at the level of 1.1230.

Part of the profit should be fixed near the level of 1.1100.

A Stop-loss should be placed near the level of 1.0790. 

The bullish trend is of a short-term nature, so it is suggested to limit the trading volume to no more than 2% of your capital.