EUR/USD Daily Chart Analysis – 2024-01-12

EUR/USD remains in a Range after of key US CPI news

In the intricate dance of EUR/USD as of January 12, 2024, the technical and fundamental analyses converge, painting a picture of a market in flux, but with a current bias that leans towards bullishness, as evinced by the prevailing “Buy” signals from both moving averages and technical indicators. However, the fundamental context, particularly the recent US CPI and unemployment claims data, suggests a more nuanced interpretation.

Fundamentally, the market is digesting the latest US CPI data, which came in at 0.3% month-on-month, aligning with expectations. However, the year-on-year figure at 3.9%, while slightly below forecasts, remains tethered near the 4% mark, indicating persistent inflationary pressures. This has implications for the Federal Reserve’s policy stance, with the market possibly pricing in continued or increased monetary tightening, which in turn has bolstered US yields and supported a stronger US dollar.

The moving averages are weighted towards a bullish outlook, with the majority indicating “Buy”. This suggests a positive trend in the short term, especially as the MA5, MA10, and MA50 align with this perspective. Even the longer-term MAs, such as the MA100 and MA200, corroborate this sentiment, painting a picture of enduring strength in the Euro against the Dollar.

On the indicator front, the RSI at 52.016 sits in neutral territory, indicating neither overbought nor oversold conditions, leaving room for movement in either direction. The MACD at 0.000, right at the equilibrium point, awaits a definitive signal for momentum. The mixed signals from the Stochastic oscillators, with the main STOCH(9,6) at “Buy” and the STOCHRSI(14) at “Sell”, reflect a market grappling with immediate momentum. The ADX at 23.759 remains neutral, suggesting no strong trend is in play, while the Williams %R indicates oversold conditions, which could potentially lead to a bounce-back if bullish sentiment sustains.

The technical bullishness is somewhat tempered by the fundamental backdrop. Market sentiment has shifted in response to the US CPI and claims reports, which has given the US dollar a lift on the back of rising yields. Traders and investors are likely to weigh the technical signals against the potential for the Federal Reserve to maintain or even escalate its hawkish stance in light of the inflation data.

Key Levels to Watch: : 1.09321,1.09829,1.10032