EUR/USD hasn’t changed all that much and is treading water just above the 1.1600 level during the very early European trading session on Monday. This stability comes as investors closely monitor the upcoming preliminary Harmonized Index of Consumer Prices (HICP) data for November from the Eurozone. Traders are taking a defensive stance as they wait for the report. They are deeply scrutinizing how it could play a positive role in monetary policy and market sentiment.
The EUR/USD pair is strengthening on its own accord. It now sits barely under a falling resistance trend line that has capped its efforts since its mid-March high of 1.1776. As illustrated by the green trend line, the pair is at a pivotal moment in its trading history as the trend line intersects with the current trading level. Market participants are anxiously awaiting the first inklings of a signal.
Resistance for the euro is seen around 1.1606. Such a decisive close above this threshold would likely be the indication of stronger upward momentum for the currency pair. This concerted movement would benefit it to truly flourish while escaping its COVID-era constraints. Relative Strength Index (RSI) for EUR/USD is currently at 51.8. This point indicates a lack of direction in momentum following a bounce back earlier this month. This balanced momentum indicates that even with strong bullish sentiment, it is held in check by general market hesitance.
If the EUR/USD pair gives up 1.1577 then sellers are expected to take back control. While this development would be a welcome change, it might lead some to worry about an impending bust. This would have the effect of adding to already strengthened bearish sentiments within the market. Consequently, investors will inevitably begin to reposition themselves in light of this new data.
The recent trading dynamics illustrate the macro picture that is the Eurozone economy. Both inflationary pressures and consumer spending patterns are under intense scrutiny today. The flattening 20-exponential moving average (EMA) below provides the first inflection point of short-term support for the EUR/USD pair. Despite a waning of bearish trends, the future remains uncertain for the market.
As markets wait for the HICP data release, all eyes will be on the European inflation data for hints of direction on key trends and EU consumer prices. Traders and analysts will benefit from this actionable market-shaping intelligence gleaned from the data. They will judge how far it can influence future monetary policy decisions by the European Central Bank (ECB).