The EUR/USD currency pair has been demonstrating a positive trend, trading above the 1.0400 mark as of Tuesday morning. The potential for further gains is contingent on the pair successfully converting the 1.0410 – 1.0420 range into a support level. Market participants are keenly observing upcoming economic data releases, particularly with regard to inflation in the Eurozone and key US indicators.
Starting the week with momentum, the EUR/USD experienced notable gains on Monday, largely attributed to the continued weakening of the US Dollar. The USD came under pressure after a report suggested that advisors to President-elect Trump were contemplating introducing tariffs affecting all nations, limited to essential imports. Despite Trump’s adamant denial of the report, claiming it to be false, the USD struggled to recover amidst prevailing risk-on sentiment in the market.
On Tuesday, Eurostat is expected to release inflation figures for December, with predictions indicating a rise in the Harmonized Index of Consumer Prices (HICP) to 2.4%, an improvement from November’s 2.2%. Should the results exceed forecasts, it could bolster the EURO ’s strength further.
Later in the day, US economic data will take center stage, including the ISM Services PMI for December and JOLTS Job Openings data for November. Analysts anticipate an increase in the ISM Services PMI from 52.1 to 53. A reading below 50 could lead to additional selling of the USD, thereby supporting the EUR/USD . Conversely, a figure of 55 or more might allow the USD to regain some momentum, capping the pair’s upward potential.
From a technical standpoint, the Relative Strength Index (RSI) on the 4-hour chart indicates bullish sentiment, currently above 60. Key resistance is identified at the 1.0410 – 1.0420 range, with potential upside targets at 1.0460 and 1.0520 if the pair breaks through above this zone. Support levels are noted at 1.0370 and 1.0320 for any downward movements.
