EUR/USD treads water around mid-0.9900s as traders await Euro zone GDP, inflation and Fed

EUR/USD struggles for clear directions while trading inside a 20-pip range surrounding 0.9950 during early Monday. In doing so, the major currency pair portrays the market’s anxiety ahead of the key eurozone data and the Federal Open Market Committee (FOMC) meeting announcements.

That said, Friday’s US inflation data teased EUR/USD sellers but the underlying details suggest that there is room for the Fed to discuss easy rate hikes from December onwards, which in turn challenge the pair’s downside moves.

Also, the US 10-year Treasury yields seesaw near 4.00% after snapping the 10-week uptrend by the end of Friday. Additionally testing the EUR/USD traders are the mixed moves of the equities as the US equity future prints mild losses even after Dow Jones braces for the biggest monthly jump since 1976.

Talking above the risk-negative catalysts, news of Macau’s lockdown of a casino resort and fears emanating from Russia gain major attention during a sluggish session. “Russia, which invaded Ukraine on Feb. 24, halted its role in the Black Sea deal on Saturday for an ‘indefinite term’ because it could say it could not ‘guarantee the safety of civilian ships’ traveling under the pact after an attack on its Black Sea fleet,” reported Reuters. On the other hand, the concerns that the Fed might discuss slowing down on the rate hikes from December seem to challenge the pair buyers of late.

Looking forward, the first readings of the Eurozone’s third quarter (Q3) Gross Domestic Product, expected to ease to 0.2% versus 0.8% prior, as well as the October month’s HICP, likely to soften to 0.6% MoM compared to 1.2% prior, will be important for immediate directions. The reasons could be linked to the growing fears of economic recession in the bloc, which if confirmed could weigh on the EUR/USD prices.

It should, however, be noted that the Fed’s move will be more important for clear directions as talks over the US central bank’s easing on the further rate increases, currently expected to have 0.75% rate lift, could renew the EUR/USD pair’s upside moves.

Technical analysis

Given the bearish MACD signals and the downbeat RSI (14), not oversold, the EUR/USD prices are likely to extend the previous day’s downside break of the one-week-old ascending trend line, as well as the 21-SMA.

Hence, EUR/USD sellers could wait for a successful break of the 0.9960 immediate support line, previous resistance, for conviction. Following that, a downward trajectory towards an upward-sloping trend line from September 27, close to 0.9755, appears more likely. During the fall, the 50% and 38.2% Fibonacci retracement level of the pair’s September-October downside, near 0.9870 and 0.9790 in that order, will be crucial intermediate levels to watch.