- The pair bounced after failing to clear the lower middle line.
- The midline acts like a magnet.
- Higher US inflation should boost the dollar.
EUR/USD is trading at 1.0793 at the time of writing. It looks determined to move closer to the psychological level of 1.08 as the US dollar moves back down.
After a sharp decline, the price signaled exhausted sellers even as the U.S. released better-than-expected data on Friday.
Today, the euro received a helping hand from the Eurozone ZEV Economic Sentiment, which reached 23.0 points against the expected 13.3 points, and from the German ZEV Economic Sentiment.
The indicator was reported at 12.8 points above the estimated 9.6 points. Later, economic data from the United States should shake up the rate, so sentiment could change again.
The US will release inflation data. The consumer price index could announce a 0.0% increase in the last month, as well as in October. The CPI could register an annual growth of 3.1% compared to a growth of 3.2% in the previous reporting period, while the Core CPI is expected to register a growth of 0.3% compared to a growth of 0.2 % in October. Higher-than-expected inflation boosts the dollar, while lower inflation could punish the USD.
Technical analysis of EUR/USD price: Rebound
From a technical point of view, the EUR/USD price found support at the 50% retracement level (1.0733), canceling the break below the lower middle line (lml) of the descending villa. It is now triggering a weekly pivot point of 1.0790 and is close to reaching the 38.2% retracement level (1.08).
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The failure to break out the lower middle line (lml) triggered a potential bounce to the middle line (ml). This acts as a magnet and attracts the price. The larger leg can be activated more by rolling through this obstacle.
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