EUR/USD Price Forecast: Trapped in range ahead of data, political definitions

EUR/USD Current price: 1.1735

• Germany reported that the Harmonized Index of Consumer Prices rose 2.4% YoY in September.
• Mounting speculation that the US government will shut down undermines the mood.
• EUR/USD retreats from its intraday peak, but holds above 1.1700.

Financial markets keep revolving around a potential United States (US) government shutdown on Tuesday, after headlines indicating Congress representatives failed to clinch a deal on federal funding late on Monday, with Senate Democratic Leader Chuck Schumer noting that the two sides still have "very large differences." The EUR/USD pair peaked at 1.1761 during European trading hours, easing towards the current 1.1730 price zone ahead of the US opening.

Data-wise, Germany released the preliminary estimate of the September Harmonized Index of Consumer Prices (HICP), which rose at an annualized pace of 2.4%, higher than the 2.2% anticipated and the previous 2.1%. The monthly index printed at 0.2%, surpassing expectations of 0.1%.

The American session will bring the September US CB Consumer Confidence, forecast at 96.0, down from the 97.4 posted in August. Also, the country will release the JOLTS Job Openings report, expected to show that job openings declined to 7.1 million from the 7.181 million posted in July.

A word of warning, profit-taking and position readjustments as the quarter ends today is likely in the American afternoon, and may result in some out-of-nowhere price action.

EUR/USD short-term technical outlook

From a technical point of view, the EUR/USD pair retains modest weekly gains but remains in a wait-and-see mode. In the daily chart, the pair keeps finding sellers around a flat 20 Simple Moving Average (SMA) just above the current level, while a mildly bullish 100 SMA offers support at around 1.1600. At the same time, technical indicators remain stuck around their midlines without clear directional strength, reflecting the absence of speculative interest.

The 4-hour chart shows a flat 100 SMA contained advances, while the 20 and 200 SMAs converge around 1.1710, providing support. Finally, technical indicators turned south, easing from their recent peaks with increased downward strength, but still holding within positive levels, which limits the odds for a steeper slide.

Support levels: 1.1710 1.1685 1.1650

Resistance levels: 1.1760 1.1795 1.1830