EUR/USD price remains muted at 1.029 as RSI indicates bullish momentum
EUR/USD stalls recovery as resistance at 1.03560 triggers reversal
EUR/USD continues to face downside pressure, despite a 1.7% recovery earlier this week from oversold levels near 1.01740.
The pair reached a five-day high at 1.03560 on Wednesday, but resistance at the Fibonacci golden ratio and the 100 EMA on the 4-hour chart triggered a reversal to 1.02600. As of Thursday early American trading session, EUR/USD is trading at 1.02900, after having been muted in the Asian and European session, with the Relative Strength Index (RSI) holding above 50 in bullish territory.
The price action was influenced by the latest US Consumer Price Index (CPI) report, which delivered mixed signals. While headline inflation rose as expected on a yearly basis, the core inflation figure surprised with a slower-than-anticipated increase. This disparity has forced traders to reconsider their expectations for the Federal Reserve’s future policy moves, adding further volatility to EUR/USD. New York Fed President John Williams expressed concerns about the economic outlook, highlighting uncertainty regarding potential fiscal and trade policies under the incoming administration.
EUR/USD price dynamics (November 2024-January 2025). Source: TradingView.
EUR/USD price outlook: Market awaits US economic data for next price move
Market participants are now cautious as the outlook for inflation remains uncertain. As traders reassess the implications of the mixed inflation report, all eyes will turn to upcoming US data, including Initial Jobless Claims and December Retail Sales which are set to be released at 13:30 GMT on Thursday, these figures may provide the next catalyst for EUR/USD’s next move.
Despite the recent pullback, the relative strength index (RSI) remains above 50, indicating that bullish momentum is still present. A breakthrough above 1.03560 could signal a resumption of the recovery, with resistance levels at the 100 EMA and Fibonacci golden ratio likely to be tested again. On the downside, 1.02600 remains a key support level, and a break below this could see the pair retesting the recent lows near 1.01740.
EUR/USD dropped sharply below the 1.02 level on January 13 but quickly rebounded to 1.031 the following day. The recovery occurred despite weaker-than-expected U.S. economic data.
