EUR/USD Holding Close to 1.10 After Rangebound Action Last Week

EUR/USD has been bullish since early October last year, as the price reversed from below 1.05, and pushed to 1.1140 by late December, as the USD kept retreating on softer FED rhetoric and market expectations about rate cuts coming soon keep increasing. However, the price retreated in the last few days of 2023 and has been trading in a range since the beginning of this year.

Moving averages have been acting as support on the H4 chart, with the 200 SMA (purple) holding the retreat lower at around 1.0750 in the second week of December. This moving average has been providing support again throughout this month, and after the retreat in late December, EUR/USD bounced off this moving average which stood around the 1.09 zone. Buyers jumped in with a defined risk below the moving average, positioning themselves for the continuation of the rally to the upside.

However, the 100 SMA (green) which stands just below 1.10 has been acting as resistance in this timeframe, and despite being pierced a couple of times, buyers seem reluctant to push the price and keep it above 1.10. So, the 100 SMA has been acting as resistance. But, the sellers, on the other hand, will require the price to go below the 200 SMA to invalidate the bullish setup and position for a drop to the 1.07 zone first, before eyeing 1.05.

Last week on Thursday the US CPI (consumer price index) report showed an increase in December, which should have helped the USD, however, the PPI report came in weaker on Friday. The PPI monthly decreased by -0.1%, compared to forecasts of 0.1%. In a 12-month measurement, the PPI increased by 1%, falling short of expectations of 1.9%. Core PPI remained constant at 0% compared to November’s data but fell short of expectations, with year-on-year results falling from 2% to 1.8%. So, the fundamental picture remains mixed for this pair.

EUR/USD Live Chart