EUR/USD rallied on Tuesday to a 4-session high and pierced the 10-day moving average Tuesday as bullish influences continue to emerge.

Investors are pricing in a higher terminal ECB rate after French and Spanish inflation data surprised to the upside.
Euro zone 5-year/5-year inflation linked swaps indicate higher inflation is expected as they rally towards the 2022 yearly high.

The inflation data drove German yields higher, which tightened German-U.S.
2-year yields spreads US2DE2=RR and eroded some of the dollar's yield advantage over the euro.

German February HICP is released March 1.
An upside surprise would reinforce investors' views the ECB will have to lean more hawkish.

Options investors are less wary about EUR/USD downside as risk reversals indicate vol premiums for puts over calls have been eroding rapidly since Feb.
13.

EUR/USD daily technicals highlight upside risks.
The daily cloud base lends support and daily RSI is rising but nowhere near overbought.

U.S.
February ISM manufacturing and non-manufacturing PMIs, especially the inflation components, are risks to EUR/USD's upside scenario.
Upside surprises to the data would rally U.S. rates and the dollar on more hawkish Fed expectations.

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