The EURUSD currency pair gained 53 basis points in the prior week as the Greenback lost ground on signs of a softening U.S. economy. 

U.S. Job Openings came in 4.5% lower than consensus, while the ISM Manufacturing hovered near a three-year low. Compared to the Euro Area, the U.S. economy is showing signs of cooling more rapidly. Traders will look to the U.S. and German CPI and Inflation for clues on the respective Central Bank’s next policy direction. 

Technical

The EURUSD has been in an uptrend, supported by price action trading in an ascending channel pattern above the 100-day moving average. Support and resistance were established at the 1.07902 and 1.09696 levels, respectively.  

Following a retracement from resistance, price action was led into the 61.80% Fibonacci Retracement Golden Ratio at the 1.08590 level, finding confluence with the ascending channel’s support. Following a rejection of the level, bullish traders swept in and took the pair higher. If bullish traders march forward, the pair could be directed back toward resistance if supported by substantial volumes. 

Alternatively, a reversal could play out if bearish traders look to pile up pressure on the pair. If declining volumes accompany upside price action, it could indicate weakening bullish momentum. A breakout below the Golden Ratio on high volumes could validate downside price action, with the 1.07902 level set as a probable level of interest.  

Summary

The Euro Area Retail sales came in lower for the month, signalling constrained consumers in the region. With Key inflation data looming, traders will likely sit out of the market as they wait to determine where inflation is regarding interest rate policy outlook. The EURUSD currency pair will likely range between the 1.07902 and 1.09696 levels ahead of the CPI data.  

Sources: Reuters, TradingView