EUR/USD traded to a fresh 1-1/2-month low Friday after U.S.
inflation and spending data suggested the Fed will remain on track to deliver additional rate hikes which in turn should keep downward pressure on EUR/USD.

The unexpected upside surprise for January PCE drove Eurodollar futures prices EDZ3 lower as investors reduce their expectations for a Fed rate cut in late 2023.

U.S.
rate gains helped the dollar maintain its yield advantage over the euro.
Eurodollar and Euribor rates markets indicate that yield advantage over the euro will be near 190 bps toward the end of 2023 and will only narrow slowly over the next two years even though the ECB's rate hike path remains higher for now.

EUR/USD technicals highlight downside risks and new bearish signals have emerged.
Downward price action followed Thursday's daily doji candle.
Daily and monthly RSIs are falling and are not yet oversold, implying downside momentum is intact.
February's inverted monthly hammer candle reinforces the bearish signals.

1.0450/90 support, where a series of daily lows and the 38.2% Fibo of 0.9528-1.1034 sit, is in focus, which, if broken would have a short target below 1.0300.

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