EUR/USD remained in the trading range of 1.0930-1.1000 on Friday. The upside remained limited as the European Central Bank (ECB) announced the end of its extended rate tightening regime, while higher consumer price inflation in the United States signaled that rates could remain higher for a longer period of time.
Feast in Overseas
The currency pair on Monday continued to trade apathetic within Friday's trading range due to the extended weekend in the U.S. economy amid the Martin Luther King holiday.
Producers increased the annual prices of goods and services at a slower pace of 1.0% compared to 1.3% as expected by investors. Core PPI, which excludes volatile food and oil prices, slowed to 1.8% vs. consensus of 1.9%.
Price pressures are gradually decreasing
The bets supporting a rate cut by the Federal Reserve (Fed) at its March monetary policy meeting are persistently positive, despite policymakers endorsing them for at least the first half of this year. Fed policymakers need more evidence to confirm that price pressures are gradually declining toward the 2% target before moving to a rate cut cycle.
This week, market participants will focus on the monthly US retail sales data for December. Investors expect consumer spending to have risen at a higher pace of 0.4% versus 0.3% growth in November. In addition, the Fed's Beige Book will be in focus.
Technical outlook
The EUR/USD pair seems to be losing the bullish strength we witnessed in December. It is at the lower end of the previous week's range and not far from the January low set at 1.0876. The technicals in the weekly chart reflect a lack of directional conviction. EUR/USD is above the 200 moving average (EMA), which provides dynamic resistance around 1.0800.
The Momentum indicator is gaining modest downside strength within negative levels, while the Relative Strength Index indicator remains directionless around 53, suggesting that bearish interest is not yet sufficient.
EUR/USD peaked in early January at 1.1000, a level that needs to be overcome to avoid a more significant decline. Still, the pair would need to extend its recovery above 1.1120 to become bullish.
