EUR/USD ticks higher ahead of crucial inflation reports from Eurozone and US

• EUR/USD attracts some follow-through buying on Thursday amid modest USD weakness.
• Reduced bets for an aggressive ECB policy easing underpin the Euro and also lend support.
• Traders now look to key inflation figures from the Eurozone and the US for a fresh impetus.

The EUR/USD pair is seen building on the previous day's goodish rebound from sub-1.0800 levels, or a one-week low and gaining some positive traction during the early European session on Thursday. Traders, however, might opt to wait on the sidelines ahead of a slew of inflation reports from Germany, France, Spain and the United States (US), which will be followed by the flash Eurozone CPI print on Friday. In the meantime, reduced bets for rapid interest rate cuts by the European Central Bank (ECB) continue to act as a tailwind for the Euro.

Apart from this, a modest US Dollar (USD) downtick is seen as another factor lending some support to the EUR/USD pair. Any meaningful downfall for the Buck, however, seems limited in the wake of speculations that sticky inflation and a still-resilient US economy should allow the Federal Reserve (Fed) to keep interest rates higher for longer. Apart from this, a softer risk tone could benefit the Greenback's relative safe-haven status and might contribute to capping gains for the currency pair. This warrants some caution before placing fresh directional bets.

Daily digest market movers: Draws support from weaker USD, delayed ECB rate cut bets

• Investors seem reluctant ahead of the crucial inflation data from the Eurozone and the United States, leading to the EUR/USD pair's subdued range-bound price action on Thursday.
• Retail Sales in Germany fell by 0.4% MoM in January, missing expectations for a 0.5% increase, and adding to concerns about the darkening outlook for the Eurozone's biggest economy.
• ECB Governing Council member Peter Kazimir said on Wednesday that he would prefer the central bank to start cutting rates in June, followed by a smooth and steady cycle of policy easing.
• ECB Vice President Luis de Guindos said that the recent inflation data has been very positive, though the central bank needs to be sure that prices will move towards the 2% target before cutting rates.
• Money markets are now pricing in around 90 basis points (bps) of rate cuts by the ECB this year, down from almost 150 bps a month ago, which is seen as acting as a tailwind for the Euro.
• The second estimate of the US GDP print showed on Wednesday that the world's largest economy grew by a 3.2% annualized pace during the fourth quarter vs the advance reading of a 3.3% rise.
• The data suggested that the US economy remains in good shape, which, along with comments by several Federal Reserve officials, reaffirmed the higher-for-longer interest rates narrative.
• New York Fed President John Williams said that the central bank will begin cutting rates this year depending on how the data comes in, albeit there is still a way to go before hitting the 2% inflation target.
• Atlanta Fed President Raphael Bostic stressed that the US central bank has not declared victory over inflation yet and said that he is comfortable advising patience when it comes to loosening policy.
• Furthermore, Boston Fed Bank President Susan Collins noted that it will become appropriate to begin easing policy later this year but the path to returning inflation to its 2% target will likely be bumpy.
• The US Dollar, however, struggles to attract buyers as traders look to the US Personal Consumption Expenditures (PCE) Price Index for cues about the Fed's rate-cut path and some meaningful impetus.
• Thursday's economic docket also features the flash CPI estimates from Germany, France and Spain, followed by US macro data – Weekly Initial Jobless Claims,  the Chicago PMI and Pending Home Sales.
• The focus will then shift to the Eurozone consumer inflation figures on Friday, which might influence expectations about the ECB's future policy decision and infuse volatility around the currency pair.

Technical analysis: EUR/USD bulls could aim back to conquer the 1.0900 round-figure mark

From a technical perspective, oscillators on the daily chart have just started gaining positive traction and support prospects for further gains. Some follow-through buying beyond the 1.0850 area will reaffirm the constructive outlook and lift the EUR/USD pair to the 1.0900 round figure. A sustained strength beyond the latter will be seen as a fresh trigger for bullish traders and pave the way for a further near-term appreciating move, towards reclaiming the 1.1000 psychological mark for the first time since January 11.

On the flip side, any meaningful downfall might continue to find some support near the 1.0800 mark. That said, acceptance below the said handle could make the EUR/USD pair vulnerable to accelerate the fall back towards retesting sub-1.0700 levels, or a three-month low touched on February 14. The latter should act as a key pivotal point, which if broken decisively will be seen as a fresh trigger for bearish traders.