EUR/USD is stuck in a tight range today, with investors focusing on last week’s macro events, the ongoing performance of the energy markets, and the ongoing protests in France. It is also wavering ahead of a relatively muted week in the economic calendar. It was trading at 1.2225, a few points above this week’s low of 1.1110.
France Protests and Christine Lagarde Statement
EUR/USD pair is attempting to rebound, even as fears of a debt crisis in Europe continue. These fears escalated during the weekend when protests in France turned deadly. The core issue among the protesters is the slashing of the education budget.
The government slashed spending because of the ongoing surge in public debt that has pushed the ten-year yield to 4.88%. This is a high level since the figure bottomed out at 3.216% in March this year. Bond yields in other European countries like Germany and Italy have continued rising.
The EUR/USD pair is also wavering as crude oil prices retreat. Brent, the global benchmark, dropped to $108 from last week’s high of $110. Still, there is a risk that the ongoing oil price retreat is temporary, as fundamentals favor more gains. Iran has continued shooting tankers attempting to cross the strait, while oil inventories have continued falling.
There will be no major macro numbers from the United States this week. The only macro catalyst to watch this week will be a statement from Christine Lagarde, the head of the European Central Bank (ECB). Her statement will come ahead of next week’s interest rate decision, in which officials are expected to leave interest rates unchanged.
The key macro data to watch this week will be the German PPI and European consumer confidence report.
EUR/USD Technical Analysis
EUR/USD chart | Source: TradingView
The four-hour chart shows that the EUR/USD pair has rebounded in the past few days. It has risen from 1.1112 on October 14 to the current 1.1223. A closer look at has formed an inverted head-and-shoulders pattern, a popular bullish reversal sign.
The pair has jumped above the 50-period Exponential Moving Average (EMA) and the Strong, Pivot, Reverse level of the Murrey Math Lines tool. Therefore, the pair will likely have a bullish breakout, potentially to the psychological level of 1.3000. A move above that level will point to more gains towards the Ultimate Resistance level of 1.1352.
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