When will the PCE inflation report be released, and how could it affect EUR/USD,,

The PCE inflation data is slated for release at 13:30 GMT. The monthly Core PCE Price Index gauge is the most-preferred inflation reading by the Fed, as it’s not distorted by base effects and provides a clear view of underlying inflation by excluding volatile items. Investors, therefore, pay close attention to the monthly Core PCE figure.

Stronger-than-forecast Consumer Price Index (CPI) and Producer Price Index (PPI) readings in January, combined with the impressive labor market report, revived expectations for the Fed to continue to delay the policy pivot.

The CME FedWatch Tool shows that markets are fully pricing in a no-change in the Fed policy rate in March and see an 85% probability for another hold in May. Although the market positioning suggests that there isn’t much room for additional USD gains in case a strong monthly core PCE reading confirms a Fed policy pause in May, investors could see this data as a sign that could potentially reduce the number of total rate cuts in 2024. Hence, a print above the market expectation could provide a boost to the USD and weigh on EUR/USD.

On the other hand, a softer-than-forecast increase in the monthly core PCE is unlikely to revive expectations for a rate cut in May. Nevertheless, such a reading could help the risk mood improve and allow EUR/USD to edge higher by making it difficult for the USD to hold its ground.

FXStreet Analyst Eren Sengezer offers a brief technical outlook for EUR/USD and explains:

“The 200-day Simple Moving Average (SMA) and the 100-day SMA form a pivot level for EUR/USD at 1.0820-1.0830. If the pair fails to stabilize above that level, it could target 1.0700 (Fibonacci 61.8% retracement of the October-December uptrend) on the downside. In case EUR/USD confirms 1.0820-1.0830 as support, 1.0900 (psychological level, static level) could be seen as the next bullish target before 1.0950 (Fibonacci 23.6% retracement)."