The EUR/USD currency pair oscillates within a relatively narrow range below the 1.0800 mark during Monday’s latter half. Investors show caution, refraining from significant positions ahead of the release of US January inflation data. This cautionary stance makes it challenging for the pair to establish a clear direction.
Following four consecutive days of gains, the EUR/USD pair now trades in negative territory, with indications suggesting that bearish pressure will persist.
Technical indicators on the daily chart demonstrate bearish inclinations, with selling interest on the rise. Resistance is evident around the 1.0790 level, with any spikes beyond this point quickly corrected. Additionally, the 20-day Simple Moving Average (SMA) trends downward, indicating a bearish sentiment.
On the 4-hour chart, EUR/USD breaches the flat 20 SMA and continues to trade below it, while longer moving averages trend downwards. Technical indicators show a southward rotation, albeit with limited directional strength. Sellers are eyeing a breach of the 1.0720 level to confirm the bearish trend and reinforce their short positions.
Support levels: 1.0720, 1.0695, 1.0650 Resistance levels: 1.0790, 1.0840, 1.0880
The EUR/USD pair retraces from a one-week high of 1.0805, currently hovering around 1.0770 ahead of the US market open. Market sentiment remains cautious as traders await the release of US inflation data, which will provide crucial guidance for future Federal Reserve decisions. The subdued market environment is further reflected in the closure of major Asian markets due to local holidays.
Meanwhile, the decline in US Treasury bond yields weighs on the US Dollar, with the 10-year note offering 4.16%, down 3 basis points from the previous close. Despite this, Wall Street exhibits a positive mood, particularly in the tech sector, with the S&P 500 trading at record levels. Continued gains in the stock market are likely to keep the USD in check.
While the macroeconomic calendar offers limited data, central bank officials’ remarks will be closely watched. European Central Bank (ECB) Governing Council member Pablo Hernandez de Cos emphasizes the importance of the ECB’s March economic projections in determining future interest rate cuts. Executive Board member Philip Lane and several Fed speakers are scheduled to speak during the American session