- EUR/USD lacks solid direction during the day, remaining within the range from a few days ago.
- The technical setup is mixed, so caution is required before positioning for a short-term trajectory.
- Traders are eyeing preliminary German CPI numbers for some stimulus ahead of Fed Chairman Jerome Powell's speech.
The new week begins on a subdued note as the EUR/USD pair struggles to take advantage of Friday's modest rebound from the 1.1125-1.1120 support area. Spot prices are currently trading around 1.1160, unchanged for the day, with traders looking for fresh stimulus following the release of Germany's consumer inflation report and Federal Reserve Chairman Jerome Powell. I am eagerly awaiting the chairman's speech.
From a technical perspective, the EUR/USD pair is still trapped within a multi-day trading band. On the back of the psychological mark of 1.1000, or a recovery from the monthly low, this range-rebound price action could be classified as a bullish consolidation phase. This, along with the positive oscillator on the daily chart, suggests that the path of least resistance for spot prices continues to be towards the upside.
That being said, a bearish double top pattern has been forming recently due to repeated failures to gain momentum and find acceptance above the 1.1200 round number. Bullish traders require some caution. Therefore, it is wise to wait for a sustained breakout of the aforementioned short-term trading range before confirming and positioning the next leg of the EUR/USD pair's directional movement.
Meanwhile, the 1.1200 mark is likely to continue acting as an immediate hurdle ahead of the 1.1215 region, or the 14-month high touched last Wednesday. Some follow-through buying will be seen as another trigger for the bulls and push the EUR/USD pair to the 1.1275 area, i.e. the July 2023 high. This momentum could extend beyond the 1.1300 mark towards the 1.1335 area on its way to the 1.1375 area and 1.1400 round numbers.
Conversely, weakness below the immediate support at 1.1125-1.1120 could drag the EUR/USD pair below the 1.1100 mark and head towards testing last week's swing lows around the 1.1085-1.1080 zone. The ensuing decline could expose the 50-day simple moving average (SMA) near the 1.1030 zone before the spot price eventually falls to the 1.1000 mark, a break of which would indicate a bearish short-term bias. This will shift the market in favor of traders.
EUR/USD daily chart
economic indicators
Consumer Price Index (YoY)
Consumer Price Index (CPI) published by the German Statistical Office Destatis Measures the average price change of all goods and services purchased by households for consumption on a monthly basis. CPI is the main indicator that measures inflation and changes in purchasing trends. YoY measurements compare prices in a base month to one year ago. Generally, high numbers are bullish for the euro (EUR), while low numbers are bearish.
