EUR/USD bounce extends beyond 1.2400

• US January inflation beat expectations, but fears receded.
• EUR/USD trading at its highest in over a week, next big hurdle at 1.2480.

After trading as low as 1.2275 following the release of US January CPI, the EUR/USD surged to as high as 1.2414 in the US afternoon, its highest since in over a week. Better-than-expected US inflation figures, which rose 2.1% YoY against the expected 1.9%, unleash a wild sell-off in US indexes, with the Dow Jones shedding over 400 points ahead of the opening.

US inflation rose by 0.5% in the month, well above the expected 0.3%. Core inflation was up 0.3% MoM and 1.8% YoY, also surpassing market's estimates. Earlier in the day, Germany and the EU released their preliminary Q4 GDP, both posting a 0.6% growth in the three months to December. German inflation, when harmonized with the EU, fell 1.0% in January.

Technical outlook

The dollar is down across the board, as fears receded. The EUR/USD pair remains near the mentioned daily high and back above the 23.6% retracement of the January rally at 1.2395, the immediate support, followed by the 1.2350 region, and 1.2300, the 38.2% retracement of the mentioned rally.

To the upside, resistances can be seen around 1.2445, and above, at 1.2480 where selling interest contained the advances multiple times early February.