EUR/USD and a Return to $1.0450 in the Hands of Pre-CPI Report Jitters

It is a quiet day for the EUR/USD on the economic calendar. There are no economic indicators from the euro area for investors to consider today.

The lack of stats will leave the EUR/USD in the hands of market risk sentiment throughout the session. Tomorrow’s US CPI report will likely cause some investor anxiety, with a hotter-than-expected annual inflation rate likely to question the market’s bet on a Fed pivot.

Considering the latest round of US and euro area stats, the US economy and Fed monetary policy outlook favor the Greenback. Tomorrow’s US CPI report could tip the scales and support a EUR pullback. Recent ECB member commentary has remained hawkish, cushioning the downside for the EUR/USD.

Investors would need ECB members to start taking a more dovish stance to bring parity back into play. However, no ECB members are speaking today to influence the EUR/USD.

EUR/USD Price Action

At the time of writing, the EUR was down 0.12% to $1.05202. A mixed start to the day saw the EUR/USD rise to an early high of $1.05379 before falling to a low of $1.05156.

Technical Indicators

The EUR/USD needs to move through the $1.0541 pivot to target the First Major Resistance Level (R1) at $1.0580 and the Friday high of $1.05882. Risk-on sentiment would support a bullish session, with no stats or ECB member commentary to provide direction.

In the case of an extended rally, the bulls will likely test resistance at $1.06 but fall short of the Second Major Resistance Level (R2) at $1.0627. The Third Major Resistance Level (R3) sits at $1.0712.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0494 in play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0450. The Second Major Support Level (S2) at $1.0456 should limit the downside.

The third Major Support Level (S3) sits at $1.0370.

Looking at the EMAs and the 4-hourly chart, the EMAs send a bullish signal. The EUR/USD sits above the 50-day EMA ($1.04898). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.

A hold above S1 ($1.0494) and the 50-day EMA ($1.04898) would support a breakout from R1 ($1.0580) to target $1.06. However, a fall through S1 ($1.0494) and the 50-day EMA ($1.04898) would bring S2 ($1.0456) into play. The 200-day EMA sits at $1.02835.

The US Session

It is a quiet session, with no US economic indicators for the markets to consider. The lack of stats will leave the EUR/USD in the hands of market risk sentiment through the US session.

Following the latest round of US economic indicators, Fed fear will likely test the market bets of a Fed pivot ahead of tomorrow’s US CPI report.

No FOMC members will speak today. The Fed entered the blackout period last Sunday.