EUR/USD Price Analysis: Bound in 50% and 61.8% Fibo retracement ahead of German Inflation

The EUR/USD pair is oscillating in an extremely narrow range around 1.0730 as investors are awaiting the release of the preliminary German inflation data for fresh impetus. The commentary from US President Joe Biden over the current altercation with China while addressing the State of the Union (SOTU) has failed to impact the risk appetite of the market participants.

The US Dollar Index (DXY) is displaying a sideways performance below 103.00, weighed down by US Treasury yields. The yields generated by 10-year US government bonds have dropped below 3.65%.

On the Eurozone front, the preliminary German Harmonized Index of Consumer Prices (HICP) (Jan) is expected to escalate to 10.0% from the former release of 9.6%.

EUR/USD has turned sideways after a wild movement post commentary from Federal Reserve (Fed) chair Jerome Powell on interest rate guidance. The major currency pair is expected to witness a sheer contraction in volatility ahead, which will result in wider ticks and heavy volume after an expansion in the same.

The shared currency pair is oscillating between the 50% and 61.8% Fibonacci retracements (placed from January 6 low at 1.0483 to February 1 high at 1.1033) at 1.0760 and 1.0694 respectively.

The 20-period Exponential Moving Average (EMA) at 1.0739 is acting as a major barricade for the Euro.

However, the Relative Strength Index (RSI) (14) has shifted into the 40.00-60.00 range from the bearish range of 20.00-40.00, which indicates signs of a bullish reversal.

Going forward, a break above Tuesday’s high at 1.0766 will drive the asset toward the round-level resistance at 1.0800 followed by 38.2% Fibo retracement at 1.0823.

On the flip side, a break below Tuesday’s low at 1.0669 will drag the major currency pair toward January 4 high at 1.0635 and December 22 low at 1.0573.

EUR/USD two-hour chart