EUR/USD. Analysis and Forecast

[Ben Graham]

Today, Wednesday, the EUR/USD pair is showing moderate growth, holding slightly above the 1.1650 level, but it remains close to monthly lows located around 1.1620.

The U.S. Dollar Index remains in the same range despite the release of weaker-than-expected core consumer price index data for December. The market has largely ignored this news release. According to the U.S. Bureau of Labor Statistics (BLS), price pressures on a year-over-year basis have generally stabilized, failing to confirm expectations of an acceleration in core inflation.

The lack of reaction in the dollar suggests that the data did not change the consensus forecast regarding the Federal Reserve's next steps. At present, traders are fully pricing in an unchanged interest rate at the late-January meeting, while, according to CME FedWatch data, the probability of a rate cut in March has fallen to 26% from nearly 40% a week earlier.

Volatility on European markets remains subdued due to the absence of significant macroeconomic releases. Investors' attention is focused on upcoming U.S. retail sales data and a number of speeches by Fed officials that could clarify the stance on the timing of potential changes in monetary conditions. An additional news factor is the expected U.S. Supreme Court ruling on President Donald Trump's tariffs, which is scheduled to be released later on Wednesday.

From a technical perspective, resistance is provided by the 50- and 100-day SMAs, located around 1.6550 and 1.6650 respectively. A break above this area would accelerate the pair's move toward the round 1.700 level.

On the other hand, the main support is at 1.1622, followed by the round 1.1600 level below. Failure to hold these levels would accelerate the decline toward the 200-day SMA. Oscillators on the daily chart are mixed, suggesting that the pair has not yet chosen a clear direction.

The euro is showing mixed performance against major global currencies, with the strongest gains observed against the Canadian dollar.

The material has been provided by InstaForex Company - www.instaforex.com