EUR/USD Outlook: Bulls await acceptance above 1.0600, ascending triangle resistance

The EUR/USD pair continued with its struggle to conquer the 1.0600 round-figure mark and oscillated in a range through the early part of the European session on Tuesday. Spot prices remained below over a two-week high touched the previous day, though a combination of factors might contribute to keeping the pair afloat. The shared currency continued drawing support from the European Central Bank's clear signal that it will kick start the interest rate hike cycle in July. Apart from this, subdued US dollar price action further acted as a tailwind for the major.

The recent decline in commodity prices seems to have eased fears about a further rise in inflationary pressures. Apart from this, growing recession fears forced traders to scale back their expectations for a more aggressive policy tightening by the Fed. This, in turn, kept the USD bulls on the defensive. Meanwhile, the softening inflation expectations boosted investors' confidence, which was evident from a generally positive tone around the equity markets. The risk-on flow was seen as another factor that dented demand for the safe-haven greenback.

Despite the supportive fundamental backdrop, traders seemed reluctant to place aggressive bullish bets around the EUR/USD pair ahead of the European consumer inflation figures this week. German and the Eurozone CPI report, due on Wednesday and Friday, respectively, will have a significant influence on the ECB's monetary policy forward guidance. ECB President Christine Lagarde and Fed Chair Jerome Powell are also due to speak at the ECB forum in Sintra, Portugal on Wednesday. This would help investors determine the next leg of a directional move for the pair.

In the meantime, traders on Tuesday will take cues from the US economic docket, featuring the release of the Conference Board's Consumer Confidence Index and Richmond Manufacturing Index. The data, along with the broader market risk sentiment, might influence the USD price dynamics and produce short-term trading opportunities around the EUR/USD pair.

Technical outlook

From a technical perspective, the recent move up witnessed over the past two weeks or so, from the vicinity of the YTD low, has been along an upward-sloping trend-line. This, along with the 1.0600-1.0610 horizontal resistance, constitutes the formation of an ascending triangle on short-term charts and favour bullish traders. The said barrier coincides with the 50-day SMA, which if cleared decisively would set the stage for additional gains.

The EUR/USD pair might then accelerate the momentum towards the 1.0650 horizontal support breakpoint, now turned resistance, before aiming to reclaim the 1.0700 mark. The next relevant hurdle is pegged near the 1.0745-1.0750 area ahead of the May high, around the 1.0780-1.0785 zone.

On the flip side, the ascending trend-line support, currently near mid-1.0500s, might continue to protect the immediate downside. A convincing break below might prompt some technical selling and drag spot prices towards the 1.0500 psychological mark. Some follow-through selling below the 1.0480 support zone would shift the bias back in favour of bearish traders and make the EUR/USD pair vulnerable.