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EUR/USD Price Analysis: Consolidation Around 1.0920 as Eurozone Awaits HICP Data


19 December 2023 Written by Anna Segal  Finance Industry Expert Anna Segal

EUR/USD is making modest gains as it hovers around the 1.0920 mark during the Asian trading hours on Tuesday, poised for its second consecutive session of advances. The spotlight is on the Harmonized Index of Consumer Prices (HICP) data scheduled for release from the Eurozone later today, with expectations of it remaining unchanged across all levels. This steady outlook in inflation could contribute to the current stability observed in the EUR/USD pair.

Technical Indicators Hint at Positive Sentiment

Despite the anticipated inflation data, technical indicators for the EUR/USD pair are signaling a favorable upward trend. The 14-day Relative Strength Index (RSI) has been maintaining a position above the 50 mark, indicative of positive sentiment. This suggests a potential re-test of psychological resistance at the 1.1000 level, with further upside potential towards the two-month high at 1.1017.

Additionally, the Moving Average Convergence Divergence (MACD) provides reinforcement for the overall positive momentum. The MACD line is positioned above the centerline, and it remains above the signal line. As a lagging indicator, this signals confirmation of the potential upward trend.

Potential Upside Target

The current bullish sentiment, strengthened by the MACD, may empower the EUR/USD pair to overcome its present barrier and set its sights on a significant level at 1.1050. On the downside, it's essential to monitor key support levels. The psychological support at 1.0900 emerges as a crucial level, offering initial defense against any potential pullback. Following that is the seven-day Exponential Moving Average (EMA) at 1.0893, followed closely by the 23.6% Fibonacci retracement level at 1.0884.

A decisive break below the 23.6% Fibonacci retracement level might intensify bearish pressure on the EUR/USD pair, possibly leading to a move towards the psychological support zone around the 38.2% Fibonacci retracement level at 1.0801.

Conclusion

As EUR/USD maintains its stability around 1.0920, awaiting Eurozone HICP data, technical indicators support a positive sentiment. The pair has potential upside targets at 1.1000 and 1.1017, driven by the MACD and RSI. However, it's crucial to monitor key support levels, including 1.0900 and the 23.6% Fibonacci retracement at 1.0884, to gauge potential downside risks. Traders will be closely watching the inflation data for further cues on the pair's direction.

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