Bulls maintain pressure ahead of critical US inflation data

EUR/USD Current Price: 1.1181

• German inflation fell further in September, according to preliminary estimates.
• The United States will release the September non-farm payrolls report.
• EUR/USD pulls back again from around 1.1200, but the bears have nothing to do.

EUR/USD touched 1.1208 during European hours on Monday amid persistent US dollar weakness. Financial markets are upbeat following news from China last week, as the Asian giant announced measures to stimulate the economy, combining monetary and fiscal support. In addition, monetary easing by central banks and hopes that interest rates will continue to fall supported sentiment.

The macroeconomic calendar will be quite busy this week, with a focus on European inflation and United States (US) employment. So far, Germany has released the preliminary estimate of September’s harmonized index of consumer prices (HICP), which rose 1.8% over the past twelve months, down from 2% in the previous month. On a monthly basis, the HICP decreased by 0.1%.

The American session will include a speech by Federal Reserve (Fed) Chairman Jerome Powell. On the data front, the US will release September’s Chicago purchasing managers’ index (PMI) and the Dallas Fed’s manufacturing business index for the same month.

EUR/USD short-term technical outlook

The EUR/USD pair has fallen from the aforementioned high before the US open, but is holding on to intraday gains. On the daily chart, the risk is tilted to the upside. The pair is developing above all moving averages, with the 20 Simple Moving Average (SMA) aiming north around 1.1110, providing dynamic support. The 100 SMA, meanwhile, extends its lead above a flat 200 SMA, both well below the shortest. Technical indicators, meanwhile, maintain their upward slope in positive levels, in line with another northern segment, should the pair finally clear the 1.1200 resistance zone.

In the short term, and in line with the 4-hour chart, EUR/USD offers a neutral to bullish position. Technical indicators sit without direction, albeit well above median lines and with no signs of upside exhaustion. At the same time, the pair is developing above all moving averages, with the 20 SMA flat at around 1.1160. The longer moving averages, meanwhile, keep their upward slope below the shorter one, limiting the chances of a steeper decline.

Support levels: 1.1160 1.1110 1.1075

Resistance levels: 1.1200 1.1250 1.1290

(This story was corrected on September 30 at 13:25 GMT to read “US employment data” in the headline instead of “US inflation data” as previously stated)