EUR/USD dropped to two-week lows after the US CPI report but then rebounded, rising back toward the 1.1100/10 area. Price has been unable to move away from the 1.1110 zone. The pair remains limited below 1.1120 while to the downside it is being rejected from under 1.1090. Now the pair is attempting to rise to test 1.1120; above the next level to watch would be daily highs at 1.1140. The intraday tone continues to favor the US dollar but it is losing momentum. Price still remains within a short-term downtrend channel and if it rises above 1.1130 it would be breaking the upper limited of the figure, improving the outlook for the euro. To the downside, a consolation below 1.1090 could give a boost to the US dollar and expose daily lows at 1.1060. On a weekly perspective, EUR/USD is consolidating losses, after raising during the previous three weeks. The pair corrected to the downside after climbing from 1.0790 to 1.1375 (Feb 11 high). USD up after CPI data but not much Greenback earlier gained momentum after US inflation report that showed bigger-than-expected numbers and printed fresh highs across the board, but then pulled back. “Inflation has been one of the factors the Fed has cited for its cautious stance towards monetary policy changes. But despite these latest inflation increases, concerns over the ebbing strength of domestic activity may start to provide more of an excuse for further foot dragging, whilst external demand and financial market turbulence provides yet another excuse for the Fed to do nothing for the foreseeable future”, said Rob Carnell, analyst from ING. According to him, recent chatter about negative rates in the US and the downwards impact this has had on rate expectations and yields, “may begin to ease a little, at least pending the decisions of other major central banks – most notably the ECB’s forthcoming March rate meeting.” For more information, read our latest forex news.