Original article credit: Adam Button, ForexLive via TradingView
Original article title: “EURUSD Technical Analysis: The Focus Turns to the US CPI Report”
Source: https://www.tradingview.com/news/forexlive:a8a00fe79094b:0-eurusd-technical-analysis-the-focus-turns-to-the-us-cpi-report/
EUR/USD Technical Outlook: Market Eyes Turn to Upcoming US CPI Data
By Adam Button
The EUR/USD currency pair has experienced a moderate rebound, rising from recent lows. This movement comes as market participants refocus their attention on one of the most influential macroeconomic indicators: the upcoming US Consumer Price Index (CPI) report.
Price movements in the EUR/USD pair have shown limited range trading over recent sessions. However, upcoming data releases, including critical inflation metrics out of the United States, could potentially provide the catalyst for a breakout. With the bond market recalibrating its expectations for interest rate cuts and central banks remaining data-dependent, the US CPI report is likely to play a key role in the short-term direction of the euro against the US dollar.
Key Developments in EUR/USD Price Action
– The EUR/USD pair dipped earlier in the week to a short-term low of approximately 1.0730.
– Currently, the pair is trading near the 1.0770 level, representing a modest recovery from the prior slump.
– The bounce coincided with a relatively calmer bond market environment and limited US dollar strength.
– The market’s attention now shifts to upcoming inflation data out of the United States, particularly April’s CPI report scheduled to be released shortly.
Technical Analysis of EUR/USD
The current euro-dollar movement highlights the importance of technical levels as markets await directional clarity from fundamental drivers. Price action suggests the following key technical findings:
Support Levels:
– Immediate support is located around the 1.0720 to 1.0730 region. This zone has provided a floor for the euro amid recent weakness and aligns with prior consolidation levels from March and early April.
– A more significant medium-term support sits near 1.0660, which coincides with the March lows and serves as a major technical level for bearish continuation if breached.
Resistance Levels:
– The initial resistance to the upside remains near the 1.0800 psychological level. This round-number resistance is commonly monitored and relevant in a low-volatility environment.
– Further resistance is identified at 1.0844, the recent high from earlier in April.
– A decisive break above 1.0900 would signal a resumption of bullish momentum and could potentially open the way toward further upside targets near 1.1000.
Trend Structure and Momentum Indicators:
– The EUR/USD pair has been consolidating in a broader range between 1.0600 and 1.1000.
– The technical trend remains neutral to bearish over the short term due to the failure to reclaim the 1.0900 level.
– Momentum indicators such as RSI (Relative Strength Index) are hovering near the midpoint (50 level), indicating no strong bullish or bearish momentum at present.
– Moving averages show mixed signals: the 50-day moving average is slightly declining, while price remains above the 200-day moving average, suggesting a long-term bullish bias amid short-term indecision.
Market Drivers to Watch This Week
The EUR/USD pair, like most major currency pairs, remains fundamentally driven by macroeconomic data and interest rate differentials. In the context of uncertainty about interest rate paths, particularly from the Federal Reserve, the following events are expected to have a profound impact.
1. Upcoming US CPI Report:
– Scheduled for release on Wednesday, the core CPI data is closely watched by both traders and Federal Reserve policymakers.
– The market consensus is expecting core inflation to rise by 0.3 percent for the month, which is seen as a critical threshold.
– A reading notably above 0.3 percent could prompt a hawkish repr
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