The EUR/USD pair finds itself in a precarious recovery mode amid an improved market mood. Despite the optimistic sentiment, the pair struggles to advance beyond the bearish 20 Simple Moving Average (SMA). The 20 SMA, heading south below the bearish 100 and 200 SMAs, continues to exert downward pressure, casting doubts on the sustainability of the recent uptick. As technical indicators send mixed signals, traders are left pondering the pair's future trajectory.
Currently trading around 1.0250, the EUR/USD pair has managed to recover from its recent low of 1.0177, a level not seen since November 2022. This recovery is predominantly fueled by market discussions suggesting President-elect Donald Trump's team is considering gradual tariff hikes, ranging from 2-5% month-by-month. Such talks have fostered a better market mood, contributing to the pair's modest gains.
However, technical readings in the daily chart suggest that the recent recovery may be merely corrective. The Momentum indicator shows an upward trend, yet it remains below its midline, indicating limited bullish momentum. Simultaneously, the Relative Strength Index (RSI) has resumed its slide within negative levels, underscoring persistent bearish pressure.
The EUR/USD pair's inability to break above the bearish 20 SMA remains a significant hurdle. This SMA maintains its downward strength well above the current level, providing dynamic resistance around 1.0360. The next resistance level lies at the 100 SMA in the 1.0760 region, reflecting the latest selling momentum that could challenge any further recovery attempts.
While the US Dollar has retreated slightly, potentially capping the pair's downside ahead of upcoming US Producer Price Index (PPI) data and Fedspeak, additional gains for the EUR/USD pair remain unclear. The technical landscape suggests that any further recovery may be short-lived, raising questions about whether the pair can sustain its current trajectory.
Traders eagerly await the release of the US PPI inflation data and subsequent Fedspeak for further trading impetus. These developments could provide critical insights into the potential direction of the EUR/USD pair and influence market sentiment moving forward.