EUR/USD Market Outlook
The EUR/USD pair experienced a slight decline on Monday, retreating from the 1.06 level following a technical rejection last week. Euro traders are awaiting Thursday’s European Central Bank (ECB) rate call, while Greenback bidders anticipate the release of US Consumer Price Index (CPI) inflation updates on Wednesday.
ECB Rate Cut Concerns and US Consumer Expectations
The pan-EU Sentix Investor Confidence survey for December fell to a 13-month low of -17.5, adding to the concerns of Euro bulls. The ECB is expected to reduce both its Main Refinancing Operations Rate and Rate on Deposit Facility by 25 bps each on Thursday. Meanwhile, a Federal Reserve Bank of New York survey revealed that US consumers have improved financial expectations, but also raised their expectations for future inflation, with the average respondent expecting inflation to reaccelerate to 3% by next November.
US CPI Inflation and EUR/USD Price Forecast
US session traders will be looking ahead to a fresh print of US Consumer Price Index (CPI) inflation slated for Wednesday, with a thin docket on the offering for the early week. Median market forecasts expect Wednesday’s US CPI inflation to rise to 2.7% YoY compared to October’s 2.6%.
EUR/USD Daily chart
The EUR/USD daily chart shows a bearish medium-term trend as the pair remains below its 50-day EMA at 1.0703 and 200-day EMA at 1.0828. The pair has entered a consolidation phase after the sharp drop in mid-November. Resistance at 1.06–1.0650 and support at 1.0450 are key levels to watch. The MACD indicator has started to turn slightly positive, suggesting that bearish momentum is fading. However, the overall trend has yet to shift convincingly. A breakout above 1.06 with increasing bullish momentum would be critical for buyers, while failure to do so keeps the pair vulnerable to further downside, aligning with the broader bearish trend.
