On Tuesday, Germany and the United States will release the final copies of their June inflation reports.
The proliferation of the coronavirus Delta variant has a negative impact on investor sentiment.
In the short run, the EUR/USD is neutral, with the risk to the downside.
The EUR/USD pair traded in a narrow range on Monday, according to market sentiment more than fundamental reasons. The mood deteriorated after the first session in London, but recovered during the American session. As the day progressed, the pair hit a low of 1.1835 before recovering to the current price of 1.1860. Concerns about the coronavirus Delta variant stalling the global economic recovery are weighing on investors’ minds.
President Christine Lagarde of the European Central Bank predicted a change in monetary policy direction at the next meeting over the weekend. To avoid premature tightening, the central bank has previously stated that it will tolerate inflation rising above the 2% target. On Tuesday, Germany will issue its June Consumer Price Index, which is expected to rise by 2.3 percent year on year, while the US will also reveal inflation statistics, with the annual CPI expected to rise by 4.9 percent year on year, down from 5% the previous month.
Technical prognosis for EUR/USD in the short term
In the short term, the EUR/USD pair is neutral, with a reduced positive potential. The price is developing between a modestly bullish 20 SMA below the present level and a flat 100 SMA that is limiting the upside on the 4-hour chart. The Momentum indicator is retreating from highs and on the verge of crossing into negative territory, while the RSI is flat at 54. The daily low serves as immediate support, with a break below 1.1795 strengthening the bearish case.
1.1835 1.1795 1.1750 1.1750 1.1750 1.1750 1.1750 1.1750 1.1750 1.1750
1.1885 1.1920 1.1960 1.1960 1.1960 1.1960 1.1960 1.1960 1.1960 1.1960
Pixabay image by Gerd Altmann
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