(Eren Sengezer – FXStreet)
– EUR/USD has defined its near-term trading range ahead of key data.
– The pair’s near-term outlook points to a neutral bias.
– The dollar could stay on the backfoot in case US stocks rebound.
EUR/USD has managed to stage a rebound after having declined below 0.9700 on Tuesday. The pair, however, seems to be struggling to gather directional momentum ahead of the key September inflation report from the US on Thursday.
On Tuesday, retreating US Treasury bond yields made it difficult for the dollar to continue to outperform its rivals during the American trading hours and helped EUR/USD hold its ground. The Federal Reserve Bank of New York’s monthly Survey of Consumer Expectations showed on Tuesday that consumers’ one-year inflation expectation declined to a new 12-month low of 5.4% from 5.7% in August’s survey, causing yields to edge lower.
On Wednesday, the market mood seems to be improving with US stock index futures rising between 0.4% and 0.65% on the day. In case Wall Street’s main indexes register convincing gains following Tuesday’s mixed trading, the dollar could weaken against its rivals and open the door for a leg higher in EUR/USD.
The US economic docket will feature the September Producer Price Index (PPI) data on Wednesday but investors could refrain from making large bets ahead of Thursday’s highly-anticipated Consumer Price Index (CPI) figures.
Later in the day, European Central Bank President Christine Lagarde will be delivering a speech but she is unlikely to any fresh hints regarding the size of the next rate hike.
EUR/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the four-hour chart continues to move sideways slightly below 50, pointing to a neutral/slightly bearish bias. Additionally, EUR/USD failed to make a four-hour close above the 20-period SMA after having tested that level in the early European session. On the other hand, the pair stays afloat above the descending trading channel.
On the downside, static support seems to have formed at 0.9680. In case EUR/USD falls below that level and confirms it as resistance, it could push lower toward 0.9650 (static level) and 0.9600 (psychological level).
Resistances are located at 0.9720 (20-period SMA, Fibonacci 61.8% retracement of the latest uptrend), 0.9780 (Fibonacci 50% retracement, 100-period SMA) and 0.9800 (psychological level).
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