EUR/USD Daily Forecast – Euro Falls Into a Range Below the 200 DMA

EUR/USD sold off on Tuesday’s US CPI data but promptly recover to hold within a range.
Jignesh Davda

The consumer price index in the United States was reported on Tuesday to rise by 0.2% in December which was in line with expectations.

A rally in the dollar index (DXY) on the back of the report was capped at recent highs and a range has formed since. EUR/USD is tracing out the same pattern, holding in a range between 1.1110 to 1.1145.

French CPI data revealed a rise of 0.4% in prices during December. The reporting agency attributed the rise to higher energy and food prices while there was a notable rebound in the prices of services and manufactured products.

Later in the day, the latest producer price index figures will be released from the US. As well, Fed member Harker is scheduled to speak.

EUR/USD has been trending lower since the start of the new year, however, a weaker US jobs report on Friday has triggered a recovery. With current range in place, a break above 1.1145 would confirm that this recovery remains intact while a break below 1.1110 might signal a bearish continuation.

Technical Analysis

EUR/USD declined on Tuesday to take out early week lows, likely triggering some stops in the process.

EURUSD Hourly Chart

The price action that followed is signaling some underlying weakness in the upward dollar trend. Combined with an upward trend channel forming in the pair from a low posted late last week, the pair carries a slightly bullish near-term bias.

But at the same time, a fairly major resistance confluence is holding the pair lower in the week thus far. This stems from the 200 and 20-day moving averages which have converged close to the 1.1140 price point. This area created a major barrier on Monday and Tuesday and will continue to be an important technical area in the session ahead.

A bullish break above it could see the pair rally towards resistance at 1.1183. On the other hand, a bearish break below support at 1.1110 would target support at 1.1078.

Bottom Line

  • EUR/USD saw some initial selling pressure following Tuesday’s CPI report but has recovered the losses and fallen into a range.
  • A breakout of the range between 1.1110 and 1.1145 will clarify the near-term direction.
Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.