Wednesday saw the EURUSD currency pair maintaining a subdued stance, with the US dollar holding its ground despite lacklustre economic indicators from the previous day. Despite expectations for a 4.5% decline, the latest US durable goods orders fell by 6.1% month-on-month. Nevertheless, market sentiment remained largely indifferent to this data release, eagerly anticipating Thursday’s unveiling of the pivotal PCE Price Index, the Federal Reserve’s favoured gauge of inflation.
Over in the Eurozone, the spotlight is on inflation figures this week. Germany, France, and Spain are set to reveal their respective data before the overall Eurozone inflation statistics arrive on Friday. The outcome of these releases from both sides of the Atlantic could wield significant influence on future monetary policies, potentially sparking notable movements in the currency pair in the sessions to come.
Technical
On the daily chart, a breakout has occurred at the descending channel. However, the 100-SMA (orange line) has crossed above the 25-SMA (green line), suggesting bearish momentum in the shorter term, and with resistance holding firm at 1.0853, a retest of the breakout level could be on the cards in the upcoming session.
Support at 1.0797 could be the focal point in the upcoming session, where the 25-SMA offers additional support at the initial breakout level. If this support holds, the breakout could be confirmed. However, any movement below this level could trigger a more prolonged downturn toward the demand zone at 1.0744.
If the retest confirms the breakout, the uptrend could send the price toward 1.0853 to retest the resistance that initially triggered a retracement. If it clears, the Fibonacci midpoint at 1.0916 could be pivotal before the 61.8% Fibonacci golden ratio could come under the spotlight at 1.0968 in the longer term.
Summary
The EURUSD currency pair is trending down ahead of crucial inflation statistics from both economies, which could alter the trajectory of the trend. Support at 1.0797 could be in focus to determine whether the initial breakout from the channel could be sustained.
Sources: Koyfin, Tradingview
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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