EUR/USD Forecast: Little progress as focus remains on US PCE inflation

EUR/USD Current price: 1.0854

• The US Dollar remains on the back foot, although losses are limited ahead of US inflation data.
• The United States Durable Good Orders came in better than anticipated in February.
• EUR/USD hovers around 1.0850 and lacks directional momentum in the near term.

The US Dollar maintained a weak tone throughout the first half of the day, helping the EUR/USD extend its modest advance towards the 1.0860 region during the European session. Major pairs have remained confined to tight ranges since the week started as the macroeconomic calendar has remained scarce and as market players fully price in central banks' monetary policy decisions.

The US Dollar remained indifferent despite better-than-anticipated United States (US) data. The country released Durable Goods Orders, up 1.4% in February, beating the 1.3% anticipated and reversing the previous 6.9% decline. This week's focus remains on the US Personal Consumption Expenditures (PCE) Price Index, scheduled for next Friday. Investors are cautious ahead of the Federal Reserve's (Fed) favorite inflation figure, hoping to get more clues on whether the central bank could finally trim the interest rates in June.

Earlier in the day, Germany released the GfK Consumer Confidence Survey, which showed that consumer confidence improved from -28.8 to -27.4 in April. However, the report had no impact on EUR/USD.

EUR/USD short-term technical outlook

The EUR/USD pair holds on to modest gains but has made no progress. It keeps trading between Fibonacci levels, contained by the 38.2% retracement of the 1.0694/1.0981 rally at 1.0870, while currently above the 50% retracement of the same run at 1.0835. The bullish potential, however, remains limited according to technical readings in the daily chart. The 20 and 100 Simple Moving Averages (SMAs) stand directionless around the aforementioned Fibonacci resistance, while an also flat 200 SMA hovers around 1.0830, all reflecting the absence of a clear trend. Furthermore, technical indicators remain below their midlines with divergent slopes yet still lack enough strength to confirm a directional movement.

The near-term picture is neutral. The 4-hour chart shows the Momentum indicator aiming to advance above its 100 level, while the Relative Strength Index (RSI) indicator turned flat at around 51. Meanwhile, EUR/USD trades between directionless 100 and 200 SMAs, while the 20 SMA maintains its bearish slope below the current price.

Support levels: 1.0830 1.0795 1.0750  

Resistance levels: 1.0870 1.0920 1.0965