EUR/USD and EURO STOXX 50 Outlook: Inflation Data to Shape Market Sentiment

Market Overview

The Euro is trading with mixed sentiment as investors focus on key economic indicators due this week. German Preliminary CPI m/m is forecasted at 0.3%, rebounding from a previous decline of -0.2%. On Tuesday, Core CPI Flash Estimate y/y is expected to hold steady at 2.7%, while the broader CPI Flash Estimate is forecast to rise to 2.4% from 2.2%, signaling persistent inflation.

The EURO STOXX 50 remains range-bound at 4,916, consolidating as markets digest mixed services PMI data across the Eurozone. Spanish Services PMI rose to 57.3, exceeding forecasts, while German Final Services PMI matched expectations at 51.2.

Key events ahead, such as inflation data, will likely influence the Euro and EURO STOXX 50, determining whether bullish momentum prevails or downside risks emerge

EUR/USD Technical Analysis

EUR/USD is trading at $1.0338, up 0.29% for the day, rebounding from the 38.2% Fibonacci retracement level at $1.0312. Immediate resistance is at $1.0339 (50% retracement), followed by $1.0367 (61.8% retracement) and $1.0383 (50 EMA). A break above these levels could signal bullish momentum.

On the downside, $1.0312 remains critical support, with further levels at $1.0279 and $1.0222. The descending trendline continues to suppress gains, maintaining bearish pressure unless decisively breached.

The RSI suggests neutral momentum, leaving near-term action dependent on key levels. Traders should monitor $1.0339 for signs of continuation or rejection to determine the pair’s next direction.

EURO STOXX 50 Fundamental Analysis

The EURO STOXX 50 faces consolidation as sectors tied to China’s economy, including miners and luxury goods, struggle amidst Beijing’s plans to boost economic activity through ultra-long treasury bonds. Automakers, like Stellantis, fell 3.5% following reports of a 37% drop in Italian vehicle production last year.

Luxury-heavy French bourse declined 1.5%, reflecting growing concerns over U.S.-China trade tensions ahead of Trump’s inauguration. Spirits makers, such as Campari and Anheuser-Busch, dropped after U.S. calls for cancer warnings on alcoholic beverages.

ECB forecasts rate cuts, while marginal economic recovery in Europe contrasts with robust U.S. market gains driven by AI optimism.

EURO STOXX 50 Technical Analysis

Euro Stoxx 50 Futures are trading at 4,916, slightly down by 0.02%, consolidating within a symmetrical triangle pattern—a technical formation indicating a potential breakout. The symmetrical triangle, marked by converging trendlines, typically signals a period of consolidation before the price breaks decisively in either direction.

Immediate resistance is observed at 4,937, with further levels at 4,999 and the key level of 5,041, which could trigger bullish momentum. On the downside, support lies at 4,876, with additional levels at 4,831. The 50-day EMA at 4,913 and the 200-day EMA at 4,915 reflect neutral market sentiment, aligning closely with the current price.

A breakout above 5,041 could confirm a bullish move, targeting higher resistance zones. Conversely, a breakdown below 4,831 may open the door to further downside.