The Euro (EUR) has remained relatively stable against the US Dollar (USD) on Tuesday, facing pressures from a solid Greenback amidst a generally calm market environment. At this point, the EUR/USD exchange rate is around 1.1607, marking a pause in a six-day winning streak following a brief climb to over two-week highs on Monday.
The price action has been subdued largely due to the absence of major economic data from the US on Tuesday, leading traders to exhibit a muted response to the preliminary inflation numbers released from the Eurozone. According to the latest figures, the Harmonized Index of Consumer Prices (HICP) experienced a rise of 2.2% year-over-year in November, slightly higher than the 2.1% recorded in October. Meanwhile, the Core HICP, which excludes volatile items such as energy and food, remained steady at a 2.4% year-over-year increase, unchanged from the previous month.
The divergence in monetary policy between the European Central Bank (ECB) and the Federal Reserve (Fed) continues to influence market dynamics. Analysts expect that the ECB will maintain interest rates at its meeting scheduled for December 18, while there is a strong belief in the US markets that the Fed will lower interest rates during its upcoming monetary policy meeting.
From a technical standpoint, the outlook for EUR/USD remains optimistic following its breakout and subsequent retest of a falling-wedge formation. Currently, prices are consolidating, indicating the potential for a further upward movement. However, the immediate upside is being capped by the 100-day Simple Moving Average (SMA), while the 21-day SMA is providing dynamic support. A decisive break above the 100-day SMA is essential for confirming any bullish continuation, with the next key resistance level identified around 1.1700. Conversely, if the price were to fall below the 21-day SMA, the near-term outlook could shift to a subdued or slightly bearish stance.
Momentum indicators are reflecting a period of consolidation, but they also suggest that bullish control may be gradually emerging. The Relative Strength Index (RSI) has climbed above 50, indicating positive momentum, and the Moving Average Convergence Divergence (MACD) has turned positive near the zero line, with green histogram bars signaling a potential momentum increase.
Looking ahead, key economic indicators scheduled for release later this week in both the Eurozone and the United States could inject fresh energy into EUR/USD movements. Eurozone traders are set to focus on the Producer Price Index (PPI) and the HCOB Composite Purchasing Managers Index (PMI) due on Wednesday, followed by Retail Sales on Thursday, and finally the Employment Change (QoQ) and the final Q3 Gross Domestic Product (GDP) figures on Friday.
On the US side, Wednesday will see attention on the ADP Employment Change and ISM Services PMI, while Friday’s Personal Consumption Expenditures (PCE) data will be closely scrutinized for insights into the Fed’s monetary policy trajectory.
In terms of broader currency performance, the US Dollar demonstrated strength against major global currencies today, with notable gains against the Japanese Yen. The accompanying heat map illustrates the percentage changes of the US Dollar relative to other currencies, highlighting its performance across the board.
