EURUSD Technical Analysis – A look at the chart ahead of the Eurozone CPI

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EURUSD Technical Analysis - A look at the chart ahead of the Eurozone CPI

Fundamental
        Overview

We continue to see a
    pullback in the US Dollar as the market kind of reached the peak in the
    repricing of interest rates expectations and it will need stronger reasons to
    price out the remaining rate cuts for 2025.

This was signalled by the
    lack of US Dollar strength after lots of strong US data with the market's
    pricing remaining largely unchanged around three rate cuts by the end of 2025.
    We might see the greenback remaining on the backfoot at least until the US CPI
    due in two weeks.

On the EUR side, the
    probabilities for a 50 bps cut in December rose to 63% from 26% last Friday due
    to the weak Eurozone PMIs. That might have been an overreaction as the market
    pared back those expectations this week.

Today, we get the Eurozone
    CPI report. The focus will be on the Core measures and the services inflation
    rate as that has been stuck at 4% for a year.

A downside surprise in the
    Core CPI measures might get us to the ECB decision with basically a 50/50
    chance, but the central bank will likely cut by 25 bps anyway. An upside
    surprise, on the other hand, should give the EUR a boost with the economy
    likely picking up next year and the aggressive rate cuts expectations being
    scaled back.

EURUSD Technical
        Analysis - Daily Timeframe

On the daily chart, we can
    see that EURUSD erased all the losses from the Eurozone PMIs and it's now
    trading near the 1.06 handle. From a risk management perspective, the sellers
    will have a better risk to reward setup around the trendline
    where they will also find the 61.8% Fibonacci
        retracement level for confluence.
    The buyers, on the other hand, will want to see a break higher to increase the
    bullish bets into the 1.09 handle next.

EURUSD Technical
        Analysis - 4 hour Timeframe

On the 4 hour chart, we can
    see that we had a quick push higher this morning into the 1.06 handle that
    eventually got erased as the sellers stepped in around that key swing level.
    The buyers will want to see the price breaking higher to increase the bullish
    bets into the trendline, while the sellers will keep on defending the level to
    position for a drop into new lows.

EURUSD Technical
        Analysis - 1 hour Timeframe

On the 1 hour chart, we can
    see that we have minor upward trendline defining the current bullish momentum.
    The buyers will likely keep on leaning on the trendline to position for new
    highs, while the sellers will look for a break lower to increase the bearish
    bets into new lows. The red lines define the average daily range for today.

Upcoming
        Catalysts

Today we have Eurozone CPI report with the Core CPI Y/Y expected at 2.8% vs.
    2.7% prior.

                This article was written by Giuseppe Dellamotta at www.forexlive.com.

Source: EURUSD Technical Analysis - A look at the chart ahead of the Eurozone CPI

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