The EUR/USD pair is consolidating around 1.0525 this Monday. Earlier, US Dollar Index gained ground, driven by the US inflation reports.
The latest inflation statistics have reinforced USD's positions. In September, US consumer prices did not decline; in fact, they remained 0.1% higher than Wall Street's estimates. The annual price increase stood at 3.7%, similar to the number from August. One of the significant contributors to this price stability has been the resilience of commodity prices.
This has once again brought the US Federal Reserve into the spotlight. While the market was previously confident that a “monetary pause” was imminent, uncertainty now looms. Inflation might transition to a sustained upward trajectory, and the Fed is acutely aware of this.
Moreover, heightened geopolitical instability in the Middle East is bolstering demand for USD as a safe-haven asset.
EUR/USD technical analysis
On the EUR/USD H4 chart, the quotes have reached the correction target at 1.0638. Today, the pair continues developing a wave of decline to 1.0490. After reaching this level, a correction towards 1.0560 is not excluded (with a test from below). Next, a new wave of decline to 1.0420 might start. This is a local target. Technically, this scenario is confirmed by the MACD, with its signal line below zero pointing firmly downwards. New lows are expected to be set.
On the EUR/USD H1 chart, a movement to 1.0480 within a declining wave is forming. After the price reaches it, a correction to 1.0560 could follow. Technically, this scenario is confirmed by the Stochastic oscillator: its signal line is currently above 80 and expected to drop to 50. If this level breaks, the indicator might drop to 20.
By RoboForex Analytical Department
Disclaimer: Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
