Extended sideways mode looks for fresh direction signals; German CPI data in focus today
Near-term action remains directionless, with new low at 0.9900 offering strong support and keeping the downside protected, while upticks through parity were so far short-lived and repeatedly failed to register close above, keeping the pair within a narrow range.
Daily and weekly techs remain in bearish configuration and maintain downside pressure, as the pair is on track for the third consecutive strong monthly fall.
From the fundamental side, bears were underpinned by hawkish Fed and Chair Powell’s signals that the period of high interest rates is likely to last until high inflation eases.
On the other side, investors turn their focus on the ECB’s policy meeting next week, expecting the central bank to show strong hawkish stance and go for more aggressive action in policy tightening, as soaring inflation harm the economy.
Markets eye German CPI data today (Aug y/y 7.8% f/c vs July 7.5%), with higher than expected Aug figure to add to expectations of ECB’s 0.75% hike that would offer fresh support to the single currency.
Expect initial bullish signals on close above parity (reinforced by falling 10DMA), which would require confirmation on lift through 1.0080/1.0115 zone (Fibo 38.2% of 1.0368/0.9900 / falling 20DMA).
Conversely, sustained break of 0.9900 base would signal bearish continuation.
Res: 1.0029; 1.0079; 1.0115; 1.0134
Sup: 0.9979; 0.9946; 0.9900; 0.9853