EUR/USD nonetheless showed a poor performance during the early part of Tuesday, treading water in the 1.1660 price area. The currency pair is neutral on the 4-hour chart, trading just under the 20-period Simple Moving Average (SMA). This positioning indicates a short term bearishness. The 20-period SMA is positioned underneath both the 100- and 200-period SMAs.
Looking at the larger daily picture, EUR/USD risks remain biased to the downside. With the 20-day SMA still sloping lower while sitting above the longer-term 100- and 200-day SMAs. At the same time, this trend illustrates deepening concerns over the duo’s race for relevancy. At this stage, it is still trading under the key resistance level near 1.1700.
Support for EUR/USD remains solid at 1.1590. On the upside, resistance is noted at the 200-period SMA, now at 1.1693. Moreover, the 100-period SMA provides another resistance level at 1.1724. Today, these levels continue to be critical for traders seeking to understand where the market may move next.
The technical indicators send conflicting signals about momentum. The Momentum indicator has recently crossed mildly into positive territory, hovering above its midpoint indicating that some buying power might be materializing. The RSI downward trend continues. It’s now at 44, meaning traders have little directional conviction. The RSI’s recent break below 50 down to around 48 only adds to this uncertainty.
Turning to the macroeconomic, this week’s US inflation data may have set the tone for market sentiment going forward. Looking at the overall picture, the annual inflation rate ticked up to 2.7%, as measured by the Consumer Price Index (CPI), meeting market expectations. The month-on-month reading of the US CPI came in at 0.3%, in line with expectations. The core annual CPI rose 2.6%, and its monthly advance was a bit under consensus at 0.2%.
Traders will be watching all these economic indicators like a hawk. They would have a major impact on future trajectories for EUR/USD and potential second-round effects on US monetary policy and market trends.