After finishing the previous week on a strong note. The EURUSD has managed to inch higher near the 1.0650 region early Monday.
Investors are expected to remain on the sidelines as significant events approach.
Although the short-term technical view is optimistic. The pair may struggle to gain directional momentum ahead of this week’s important events and macroeconomic data releases. On Friday, European Central Bank (ECB) President Christine Lagarde maintained that a 50 basis points (bps) rate rise in March. Increasingly inevitable” given the strong inflation in the Eurozone. When questioned about the potential of another large rate hike at the next meeting. ECB policymaker Mario Centeno argued on Monday that the ECB should not rush to conclusions since interest rates had already increased too quickly.
Nonetheless, the Euro Stocks 50 is up about 0.5% early Monday. While US stock index futures are up slightly on the day. Indicating a little increase in risk sentiment at the start of the week. The lone data on the US economic docket in the second half of the day will be January Retail Sales. Investors are unlikely to base their positions on the data ahead of FOMC Chairman Jerome speech, which begins on Tuesday. Risk perception during American trading hours might give a short-term directional hint for EURUSD. If Wall Street’s main indexes build on Friday’s robust gains after the opening bell on Monday. The US Dollar may face further selling pressure, paving the way for further rebound gains in the currency.
EURUSD Technical Outlook
The four-hour chart’s Relative Strength Index (RSI) indicator remains above 50, and EURUSD remains above the upper limit of the descending regression channel formed in early February, indicating a bullish bias.
At the time of publication, EURUSD was trading within striking distance of the 1.0650/1.0660 resistance level, where the four-hour chart’s 100-period Simple Moving Average (SMA) and the Fibonacci 23.6% retracement of the most recent downturn intersect. If the pair begins to use that region as support, further recoup advances towards 1.0700 (psychological level), 1.0720 (Fibonacci 38.2% retracement), and 1.0750 (200-period SMA) are possible.
Before 1.0600, the 20-period SMA operates as immediate support at 1.0630. (Psychological level, 50-period SMA, upper limit of the descending regression channel) and 1.0540 (mid-point of the descending regression channel, end-point of the decline, static level) (mid-point of the descending regression channel, end-point of the downtrend, static level).
