EURUSD Close To Parity Ahead Of US Inflation And ECB Bulletin
EUR/USD pair is clearly showing how the market is anxious ahead of the US inflation data release. As a result of this confusion in the markets, the EUR/USD has already faded its correction from the 0.9992 level. The reason for this bounce from 2 month high is due to the risk-off mood.
From a technical point of view, the EUR/USD is slowly losing bullish momentum, but over the long term, the bias is still towards the upside on the daily chart. For now, the EUR/USD is trading above its 20 SMA (bullish) and below its 100 SMA (bearish). Furthermore, some of the other popular indicators are also printed above the midline, which shows bias towards the upside with little selling interest.
So in the near term, the bearish correction is highly likely and is already undergoing, but it will not be for the long term. If we look at the 4-hr chart of EUR/USD, the 20 SMA seems to be supporting the bullish price action. Furthermore, the technical levels have also cooled down after spending some time in the overbought levels.
Based on this information, the important resistance levels are 1.005 and 1.0140. As for the support levels of EUR/USD, these are 0.9970 and 0.9880.
Fundamental Outlook - EUR/USD
If we look at the fundamental side of EUR/USD, the US consumer price index remains the key event with implications for even the Fed. Although the central bank pays more attention to the PCE Price Index, the markets continue to focus on the CPI readings.
And besides the CPI, the elections in the US are now complete, and we are waiting for the final results. So if the election results are different from the market's perception, that could also have an impact on the EUR/USD.
So for the fundamental side, the only thing that's relevant is the inflation data (CPI) and the results of the mid-term elections. However, some surprise events from Europe could also tilt the direction of EUR/USD.