EUR/USD Trading Strategy for Friday's High-Impact Inflation Data

EUR/USD trades at 1.0845 ahead of Friday's critical US PCE inflation data, which could determine the pair's near-term direction. Current market positioning suggests traders are slightly long euros, anticipating softer US inflation that could weaken the dollar. The pair faces immediate resistance at 1.0880, coinciding with the 50-day moving average, while support sits at 1.0820. European Central Bank officials remain hawkish, providing underlying support for the euro despite growth concerns. Traders should watch for a PCE reading above 2.8% y/y, which could trigger EUR/USD selling toward 1.0800. Conversely, a reading below 2.6% might propel the pair above 1.0900. Options activity shows increased demand for upside protection, suggesting market participants are preparing for potential euro strength. Risk management will be crucial given expected volatility around the data release.