EUR/USD Bounces Off 200-Hour MA After Soft US CPI Sparks Volatility

EUR/USD rallied sharply following a softer-than-expected U.S. CPI report before retreating to retest the 200-hour moving average, where buyers stepped in to defend the level. Both headline and core inflation readings came in below consensus forecasts, reinforcing the narrative that U.S. inflation pressures continue to moderate and prompting traders to pare back expectations for near-term Federal Reserve tightening. The initial spike higher reflected dollar selling as markets recalibrated rate expectations, but the pair subsequently pulled back as sellers emerged near resistance, highlighting the ongoing tug-of-war between bulls and bears. The 200-hour moving average has emerged as the key technical pivot; a sustained hold above this level could open the door for a retest of session highs, while a decisive break below would shift near-term momentum in favor of sellers. Traders should watch for follow-through in upcoming sessions, particularly around Fed speaker commentary and additional U.S. economic data that could further shape monetary policy expectations.