The EUR/USD is trading near 1.1150, struggling to gather momentum in either direction as markets brace for key EU inflation data and ongoing commentary from US Federal Reserve officials. The pair has remained within familiar levels, awaiting fresh catalysts to determine its next move.
Key Takeaways
- EUR/USD Near 1.1150: The pair continues to hover around the 1.1150 mark as traders await the release of critical inflation data from the European Union.
- Upcoming EU Inflation Data: Investors are focused on the Harmonized Index of Consumer Prices (HICP) YoY, expected to show a dip in inflation to 1.9%.
- Fed Commentary: Dovish expectations for further aggressive rate cuts by the Fed have been tempered by recent statements from Chair Jerome Powell and other officials.
Technical Analysis
Daily Chart Overview
- Channel Pattern: The daily chart shows EUR/USD trading within a rising ascending channel, with prices testing resistance near the 1.1150 level.
- Key Fibonacci Levels: The pair is near a critical resistance zone at the 0.786 Fibonacci retracement level, approximately 1.1276, derived from the June 2023 high.
- Support Levels: Immediate support is seen at 1.1099 (0.786 Fibonacci level) and 1.0960 (0.618 Fibonacci level), with stronger support near 1.0863 (0.5 Fibonacci retracement).
4-Hour Chart Overview
- Consolidation Area: The EUR/USD has been consolidating within the 1.1090-1.1150 range, bouncing between supply and demand zones as shown by several order block (OB) regions on the chart.
- Price Rejection: A recent rejection near 1.1180 suggests that the pair is facing resistance at higher levels. Failure to breach the 1.1150 mark could lead to a bearish retracement toward the 1.1090 area.
- Key Support: On the downside, 1.0960 remains a pivotal support level, aligning with the broader trend seen on the daily chart.
Economic Data
The release of the EU’s preliminary Harmonized Index of Consumer Prices (HICP) is crucial. Expected to dip to 1.9% YoY from a previous print of 2.2%, this inflation figure could influence ECB monetary policy expectations. Meanwhile, the US market is keeping an eye on the Nonfarm Payrolls (NFP) report due Friday, which could provide insight into the labor market and sway Fed policy.
Trading Recommendation
- Bullish Scenario: A confirmed breakout above 1.1150 could target the next resistance at 1.1200-1.1276, especially if EU inflation data exceeds expectations or Fed commentary becomes more dovish.
- Bearish Scenario: If EUR/USD breaks below 1.1099, the next target could be the 1.0960 area. Short positions may be considered with stops above 1.1150, targeting the 1.1060 zone.
Conclusion
EUR/USD is navigating familiar territory as traders await EU inflation data and further commentary from the Fed. The pair’s next move will likely depend on how economic releases and central bank communication influence market sentiment. Traders should remain cautious around the 1.1150 level, as it could determine the next directional bias for the pair.
