The EURO /dollar ( EUR/USD ) remains relatively stable in the early European session, trading just above the 1.1600 level after closing the previous week with modest losses. Technical indicators suggest a neutral outlook for the pair in the near term, as traders await crucial monetary policy decisions from the Federal Reserve and the European Central Bank (ECB).
Earlier economic data painted a mixed picture of the US economy. The Consumer Price Index (CPI) for September showed a slight increase to 4%, up from 3.9% in August, indicating persistent inflation pressures. Both headline CPI and core CPI, which excludes volatile food and energy prices, rose modestly but below analyst expectations. These figures challenged the US dollar’s recent strength, as traders remained cautious ahead of upcoming policy meetings.
Market sentiment appears cautiously optimistic, with improving risk appetite supported by optimistic developments in US-China trade relations. Over the weekend, U.S. officials indicated that China is prepared to negotiate a trade deal to prevent a potential imposition of new tariffs. Reports suggest that discussions are progressing toward a framework that may include easing some export restrictions, particularly on rare earth elements, ahead of the anticipated meeting between President Trump and Chinese President Xi Jinping.
In the absence of significant economic releases on Monday, market dynamics could be driven by risk sentiment and geopolitical developments. While the EURO maintains a firm footing above 1.1600, traders are hesitant to take large positions ahead of the policy statements from the Fed and the ECB later this week.
From a technical perspective, the EUR/USD pair exhibits indecisiveness, with the Relative Strength Index (RSI) near the midpoint. Near-term resistance levels are seen around 1.1660, with further resistance at 1.1690-1.1700. Support levels are identified near 1.1580, 1.1550, and 1.1500, respectively, with Fibonacci retracement zones providing additional reference points. Overall, traders are expected to remain cautious as the market awaits clear directional cues from monetary policymakers.
