Last week, the euro-dollar pair surged over 500 points, rising from a low of 1.0378 to a high of 1.0889. However, buyers did not attempt to push past the 1.09 level. Instead, the currency pair consolidated within the 1.08 range, drifting sideways due to a nearly empty economic calendar on Monday.

On that Monday, important macroeconomic reports from Germany painted a mixed picture. While industrial production showed strong growth, exports experienced a significant decline. As a result, the EUR/USD pair struggled to find a clear direction. During the European session, the pair fluctuated, initially dropping to the lower boundary of the 1.08 range at 1.0806, before rising by a few dozen points to reach a daily high of 1.0875.

Germany's industrial production rose 2.0% in January, marking the fastest growth rate since June last year. Analysts had expected a more modest increase of 1.6%. The surge was primarily driven by a sharp rise in automobile production, which jumped by 6.4%. Additionally, December's result was revised upward. Initially, production was reported to have contracted by 2.4%, but updated data showed a decline of only 1.5%.

However, Germany's exports fell by 2.5% in January on a monthly basis, contrary to expectations of a 0.5% increase, signaling uncertain economic prospects. The country's trade surplus for January stood at 16 billion euros, well below the 20.6 billion euros expected by analysts.

The conflicting macroeconomic reports did not provide clear support for either buyers or sellers of the EUR/USD currency pair. Additionally, the broader fundamental context raises more questions than it answers. European Trade Commissioner Maros Sefcovic stated on Monday that Washington has no intention of preventing a trade war with the EU and does not plan to negotiate a deal with Brussels. He noted that the U.S. side "does not want to negotiate."

As is widely known, the 25% U.S. tariffs on all steel and aluminum imports from the EU are scheduled to take effect in two days. While former President Trump could choose to cancel or delay these tariffs at any moment, Sefcovic's comments indicate that no such action is expected.

This statement puts pressure on the dollar, especially since Sefcovic hinted at potential retaliatory measures (without specifying any details). On the other hand, markets still consider that the U.S. president may postpone the tariffs at the last minute, just as he did with tariffs on Mexico and Canada (delaying them until April 2).

Moreover, key U.S. inflation data is set to be released on Wednesday and Thursday. Ahead of these reports, EUR/USD traders are hesitant to take large positions, whether long or short.

Preliminary forecasts suggest that February's CPI may finally start to slow—only slightly, but the key factor is that it will be trending downward. The overall Consumer Price Index is expected to come in at 2.9% year-over-year (down from January's 3.0% target), while the core CPI is projected at 3.2%, compared to 3.3% the previous month. It is important to note that this release will not change the Federal Reserve's decision to hold rates steady in March. However, it could influence market sentiment regarding the possibility of a rate cut in May.

Currently, markets see a 50/50 chance of a May rate cut. If February's CPI accelerates instead of slowing, traders will likely shift their focus to the June meeting, especially after Powell recently stated that the Fed "can afford to be patient." On the other hand, if CPI slows more than expected, the probability of a May rate cut will remain on the table, putting significant pressure on the dollar.

Given these uncertainties, it is unsurprising that EUR/USD traders are exercising caution. After a sharp 500-point rally, the pair has essentially stalled, waiting for key releases. Additionally, the "quiet period" began—a 10-day window before the Fed meeting during which policymakers were prohibited from making public statements about monetary policy.

In light of the current uncertainty, a wait-and-see approach appears to be reasonable for the pair. Buyers have not been able to break above the 1.09 level, while sellers have struggled to push the price below 1.0800. Looking ahead, there are two possible scenarios: the pair could either resume its upward trend, which would require a firm hold above the upper Bollinger Bands line on the H4 timeframe at 1.0890, or it may enter a broad correction, potentially dropping to 1.0750 or lower. At this moment, there are no clear signals favoring either outcome, creating a sort of "intermission."