EUR/USD Price Forecast: Corrective advance underway

EUR/USD Current price: 1.0647

• The United States Consumer Price Index rose 2.6% YoY in October as expected.
• European Central Bank official Villeroy said the central bank will keep cutting rates.
• EUR/USD advances in the near term, but its bullish potential remains limited.

The EUR/USD pair reached a fresh 2024 low on Wednesday, bottoming at 1.0592 before modestly bouncing towards the 1.0620 region. Demand for the US Dollar (USD) lost steam ahead of the release of the United States (US) Consumer Price Index (CPI).

According to the official release, inflation in October, as measured by the CPI, rose by 0.2% in the month and 2.6% from a year earlier, as expected. The core annual reading also met expectations by printing 3.3%. The US Dollar ticked marginally lower with the news, helped by a modest bounce in Wall Street’s futures.

Earlier in the day, the macroeconomic calendar had little to offer, although European Central Bank (ECB) Governor Council member François Villeroy hit the wires and said he expects the central bank to continue reducing interest rates. Other than that, he expects inflation to remain moderate in France and the unemployment rate to go up to around 8% before easing.

During the American session, several Federal Reserve (Fed) officials will be on the wires and market players will be looking for fresh clues on whatever the central bank may do next with the monetary policy.

Stock markets, in the meantime, maintained a sour tone throughout the first half of the day after US indexes ended in the red on Tuesday. However, as noted, US indexes aim to start the day with a positive tone following in-line with expectations CPI figures.

EUR/USD short-term technical outlook

The daily chart shows that the EUR/USD pair trades in the green, although still below Tuesday’s high. The general stance is bearish, given that EUR/USD remains well below all its moving averages. Even further, the 20 Simple Moving Average (SMA) keeps heading south below the longer ones, reflecting sellers’ dominance. Finally, technical indicators remain far below their midlines, albeit losing its bearish momentum. A bullish correction is not out of the picture, but a steeper advance does not seem likely at this point.

In the near term, and according to the 4-hour chart, the corrective advance is underway, although the bullish potential is limited. A bearish 20 SMA provides immediate resistance at around 1.0665, while the 100 and 200 SMAs gain downward traction above it. Technical indicators, in the meantime, maintain their upward slopes after correcting oversold conditions but remain below their midlines.

Support levels: 1.0600 1.0565 1.0520

Resistance levels: 1.0665 1.0700 1.0745