EUR/USD forecast: Cautiously tackles high resistance ahead of the US inflation report
|- The EUR/USD is moving higher alongside falling US yields and reached high resistance.
- The pair may hesitate, in wait for stocks and the US inflation report tomorrow.
The EUR/USD is trading around 1.2350, up approximately 50 pips on the day. The 1.2350 level served as a support line in mid-late January, when the pair traded in a higher range, topping 1.25.
The background for the advance of the pair is some stability in global stock markets. US shares closed higher on Monday and are set to open slightly lower. The relative calm in equities is accompanied by falling US Treasury bond yields. The global benchmark is down to 2.83% after reaching a peak of 2.902 yesterday, the highest in four years.
ECB President Mario Draghi said that the European economy has been continuously expanding for several years and that the ECB has to work to make it continue. His words do not provide any hints about future monetary policy.
The US calendar has been quiet yesterday and remains quiet today, apart from a speech by FOMC voting member Loretta Mester. She is known as a hawk and is unlikely to upset the apple cart. Things get busier tomorrow with the highly anticipated US inflation report. See the preview here.
EUR/USD technical picture looks positive
The daily EUR/USD chart shows a favorable view of the pair. The RSI continues rising above 50 but remains below overbought territory. The pair has set a higher low at 1.22 on Friday, above the previous trough of 1.2160. The EUR/USD also maintains a safe distance from uptrend support lines. Momentum is slightly weighing on the pair.
Above 1.2350, the next line to watch is 1.2405 which capped the pair earlier in February. The 2018 peak of 1.2537 is a crucial level.
Looking down, 1.23 has capped the narrow range and is weak support. It is followed by 1.2205, the bottom of that range. The next levels on the downside are 1.2160 seen in January and the former double-top of 1.2090.
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