EURUSD Holds Rebound, Nasdaq Holds Rally Amid Inflation Risks

Key Events to Watch

• Fed Chair Powell signals no urgency for rate cuts; testimony continues today
• Markets remain indecisive ahead of U.S. CPI results and inflation assessment
• Nasdaq maintains its bullish trend; EUR/USD holds its rebound
• Technical Analysis: EUR/USD & Nasdaq – 3-Day Time Frames

Markets on Edge Amid Inflation Concerns

The U.S. dollar's strength—initially fueled by inflation fears following Trump’s return to the White House—remains a dominant force as markets await today’s U.S. CPI data. Why does this matter? A combination of the Fed’s willingness to delay rate cuts and potential tariff consequences has intensified focus on U.S. inflation metrics, shaping market sentiment and expectations.

EUR/USD Outlook: A dollar retracement is crucial for EUR/USD to regain momentum above 1.07 and eliminate parity risks for 2025

Nasdaq Performance: The index is riding AI-driven optimism, supported by Trump’s economic policies, but lacks the momentum to break new record highs. If inflation data surprises to the upside, Nasdaq’s rally could face renewed pressure.

Meanwhile, Chinese markets are experiencing a surge in AI optimism, particularly following DeepSeek’s domestic breakthroughs and its integration into BYD’s vehicle systems. While AI-driven market growth appears sustainable, potential headwinds remain due to tariffs, inflation pressures, and trade war concerns.

Technical Analysis: Quantifying Market Uncertainty

EUR/USD Outlook – 3-Day Time Frame (Log Scale)

Source: TradingView

The EUR/USD is holding its rebound, establishing a solid support base above 1.02. A clear close above 1.0520 is necessary to eliminate further parity risks for the Euro in 2025. A breakout above 1.0520 could extend gains toward 1.0620, 1.07, and 1.0850, aligning with the July 2023 – December 2023 trendline.

On the downside, a break below 1.1070 may trigger further losses toward parity (1.00) and 0.99, aligning with the 0.681 and 0.786 Fibonacci retracement levels of the September 2022 – October 2024 uptrend.

Nasdaq Outlook – 3-Day Time Frame (Log Scale)

Source: TradingView

Although Nasdaq continues to hold its bullish rebound within a 2-year uptrend channel, it faces notable resistance at 22,000 – 22,200, requiring a clear breakout to confirm the next rally toward the 22,800 – 22,900 zone.

Downside Risks: Recent tariff-related headwinds and AI competition led to temporary lows at 20,800. A firm close below 21,200 and 20,800 could extend losses to 20,300, 19,900, and 19,700, aligning with the boundaries of a respected down-trending parallel channel from December 2024 to January 2025.

Written by: Razan Hilal, CMT
Follow on X: @Rh_waves
YouTube: Commodities and Forex Trading with Razan Hilal