During the early European session on Wednesday, the EUR/USD pair is consolidating around 1.0745. Recent data released indicated a cooling annual inflation rate in the Eurozone for June, aligning with market expectations. This development has spurred speculation about potential interest rate cuts by the European Central Bank (ECB), which could limit upside movements in the Euro (EUR) in the near term.
Technical Outlook
On the daily chart, EUR/USD continues to exhibit a bearish bias, remaining below the critical 100-day Exponential Moving Average (EMA). The Relative Strength Index (RSI) hovering around the 50-midline suggests a neutral momentum, indicating possible further consolidation ahead.
Key Levels to Watch
Resistance Levels: The major obstacle lies at 1.0786, the 100-day EMA. Beyond this, attention shifts to 1.0835, representing the upper boundary of the Bollinger Band. A clear breakthrough above this level would open doors towards 1.0885, a peak reached on May 15.
Support Levels: Initial support is anticipated around the lower Bollinger Band near 1.0650. Further downside protection rests at the psychological level of 1.0600. Should selling pressure intensify, the pair could target 1.0522, marking the low observed on October 26.
Conclusion
As traders monitor inflation dynamics and ECB policy speculation, the EUR/USD pair faces pivotal technical barriers and supports. A sustained move above the 100-day EMA or below psychological support levels could dictate the next directional bias for the pair in the coming sessions.
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