EUR/USD Daily Chart Analysis

The EUR/USD currency pair has been experiencing notable fluctuations ahead of the anticipated release of U.S. CPI data, which is expected to significantly influence market trends. Initially, the pair opened marginally higher at 1.0698, oscillating within a tight range of 1.0695 to 1.0702. Market participants in Asia appeared cautious, likely waiting for the U.S. CPI data, understanding its potential impact on U.S. yields and consequently on the USD’s trajectory.

The technical analysis suggests a bullish leaning, with Rising Relative Strength Indexes (RSIs) and the formation of a bullish pennant on the daily charts. However, upcoming economic data poses potential risks. In Europe, the focus is on the Eurozone Q3 GDP and the German November ZEW indicators. The key risk event, however, is the U.S. October CPI data, set for release on Tuesday morning in New York. This data is likely to be a critical determinant of the short-term direction for EUR/USD, influencing market sentiment and positioning.

Critical support levels for EUR/USD are identified at the 10-day Moving Average (MA) of 1.0679, followed by the 55-day MA at 1.0637 and the 21-day MA at 1.0630. A breach below the 1.0630 mark could tilt the balance towards a bearish trend. On the resistance front, a significant level is noted at 1.0764, which is the 38.2% Fibonacci retracement of the July to October decline. Surpassing this resistance could signal a bullish momentum for the pair.

In New York, the pair opened near 1.0685 after briefly touching 1.07015 overnight. A downturn was observed initially, as a lift in U.S. yields bolstered the USD, pushing EUR/USD down to 1.06655. However, a rebound was seen near the 10-day MA, coinciding with an improvement in risk sentiment. This shift saw a decline in both the U.S. dollar and yields, while stocks and gold experienced rallies, and USD/CNH reached 7.2908. EUR/USD subsequently rose to 1.0706 on EBS during New York’s afternoon session, later approaching 1.0695.