EURUSD fades bounce off 200-SMA as EU/US inflation clues loom

May 31

EURUSD marked the biggest daily gain in a week the previous day while bouncing off the 200-SMA as the Eurozone data came in overall positive while the US statistics mostly disappointed. Also allowing the Euro pair to rebound from the key SMA level is the consolidation ahead of today’s first readings of the EU inflation data and the US Core Personal Consumption Expenditure (PCE) Price Index, also known as the Federal Reserve’s (Fed) favorite inflation gauge. That said, the quote’s inability to defend the previous day’s rebound joins the bearish MACD signals and unimpressive RSI conditions to lure the bears. However, a daily closing beneath the 200-SMA support of 1.0787 becomes necessary for the seller’s return. It’s worth noting that a five-month-old resistance-turned-support line near 1.0790 and an upward-sloping trend line stretched from mid-April, close to 1.0750, act as additional downside filters. Should the pair sellers keep control past 1.0750, February’s low of 1.0694 and the yearly bottom marked in April around 1.0600 will be in the spotlight.

Alternatively, the EURUSD pair’s recovery remains elusive beneath a downward-sloping resistance line from early January, close to 1.0885 at the latest. That said, the 1.0900 threshold also stands tall to test the Euro bulls before directing them toward March’s peak of near 1.0980 and the 1.1000 psychological magnet. Furthermore, the quote’s successful trading beyond the 1.1000 mark allows the bulls to challenge the late 2023 top surrounding 1.1140, as well as the previous yearly peak of 1.1275.

To sum up, the EURUSD pair remains weak within a short-term trading range ahead of the key EU/US data.