- EUR/USD continues to move sideways near 1.0800 on Monday.
- Strong resistance seems to have formed at around 1.0830.
- The pair could struggle to find direction ahead of US inflation data on Tuesday.
EUR/USD closed the fourth consecutive day in positive territory on Friday but was virtually unchanged for the week. The pair holds steady at around 1.0800 to start the new week.
The US Dollar (USD) edged lower ahead of the weekend as the Bureau of Labor Statistics (BLS) announced that it revised the monthly Consumer Price Index (CPI) increase for December lower to 0.2% from 0.3%. On Tuesday, the BLS will release CPI figures for January and investors could refrain from taking large positions ahead of the inflation report.
Over the weekend, European Central Bank ECB Governing Council member Fabio Panetta argued that the time for an interest rate cut was fast approaching. "Any speculation on the exact timing of monetary easing would be a sterile exercise," Panetta added. These comments, however, failed to trigger a noticeable reaction in EUR/USD during the weekly opening.
The US economic docket will not feature high-impact data releases on Monday. Meanwhile, US stock index futures trade flat in the early European session, pointing to a neutral risk mood.
Later in the day, several Federal Reserve (Fed) policymakers are scheduled to speak. At this point, markets are convinced that there won't be a rate reduction in March and comments from officials are unlikely to influence the market positioning in a significant way.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart climbed above 50, pointing to a bullish tilt in the short-term outlook. EUR/USD, however, could have a difficult time clearing 1.0830, where the Fibonacci 23.6% retracement level of the latest downtrend and the 200-day Simple Moving Average (SMA) align. A daily close above that level could attract technical buyers and open the door for an extended recovery toward 1.0880 (Fibonacci 38.2% retracement) and 1.0900 (psychological level, 200-period SMA on the 4-hour chart).
On the downside, interim support is located at 1.0770 (20-period SMA) before 1.0730 (end-point of the downtrend) and 1.0700 (psychological level).
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