EURUSD Finds Some Strength for Upside Momentum Ahead of US Inflation News
EURUSD has started the week on the edge, losing a marginal -0.03% on the day’s opening level to trade at 1.0780 at 8.30 am GMT. The pair ended Friday’s trading session on a 9-week low, underlining a steady weekly downtrend tracing back to Christmas day. Notably, however, EURUSD has been rising consistently for the last four trading sessions, buoyed by a consolidating US dollar.
Asian markets have closed for the Lunar New Year holiday, leaving the action to the London and New York sessions. Therefore, Asian session traders will likely opt to wait for cues from the US economy, keeping trading volumes low in Asia and possibly keeping EURUSD in range.
The London and New York sessions will focus on the speeches from members of European Central Bank (ECB) and Federal Open Market Committee (FOMC). Speeches by ECB’s Phillip Lane and FOMC’s Neel Kashkari, Thomas Bakin and Michelle Bowman will provide hints on the next probable interest rate directions by the two institutions. Most analysts, however, do not expect much divergence from ECB’s and FOMC’s recent hawkish announcements.
The greatest impact on EURUSD will likely come from the US Consumer Price Index (CPI) data scheduled for release on Tuesday. The US dollar will be strengthened by a figure above the consensus forecast 0.3%, as it will buttress support for maintaining high interest rates for longer. A decline in January inflation will tilt the scales in favour of the euro.
The RSI signals a bullish bias, which could favour an upward momentum. EURUSD will likely pivot at 1.0775. With a bullish control in place, the pair will likely encounter resistance at 1.0810, but a break beyond that point could create momentum to test 1.0830.
However, a move by the currency pair below 1.0775 will signal potential control by the sellers. A breach below the first support at 1.0750 will invalidate the bullish view. Furthermore, further control by the bears could see the price settle further down, with the support at 1.0740.