EUR/USD in consolidation mode, eyes German CPI & Powell testimony

The EUR/USD pair has been restricted to a narrow range of 1.2360-1.2260 since last Wednesday, but a breakout could happen later today post the German preliminary CPI release and Fed's Powell's testimony.

As of writing, the currency pair is trading at 1.2323. It is widely believed that the new Fed chair Jerome Powell will stick to the script of gradual rate hikes. Still, the upside in the EUR/USD has been capped around 1.2360, possibly due to uncertainty surrounding Italian election and German SPD vote. However, the lack of buying power also reflects anxiety about what Powell will say about inflation. 

The EUR/USD pair could resume the sell-off if Powell sees a reason to hike rates more than three times this year.

Meanwhile, an upside break of the trading range ahead of the Powell testimony cannot be ruled out if the German preliminary CPI for February (due at 13:00 GMT) betters estimates.  However, Powell's testimony will likely have a final say in determining the next move in the EUR/USD pair.

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet writes - "technically, the 4 hours chart shows that an early to 1.2354 was contained by selling interest around a bearish 100 SMA, with the pair now also below the 200 SMA and struggling around a flat 20 SMA, while technical indicators entered bearish territory, but lack directional momentum. The risk is lean toward the downside, although the pair needs to break below 1.2260, last week's low, to gain actual bearish traction, with scope then to extend its decline down to 1.2205, February monthly low."

Support levels: 1.2260 1.2230 1.2205  

Resistance levels: 1.2340 1.2380 1.2425