The EUR/USD pair ended Monday slightly lower after opening the week on a solid note and briefly rising above the 1.0900 level.
Most crosses in the FX market remain trading within narrow ranges as investors take the sidelines ahead of top-tier events this week, including Federal Reserve and European Central Bank (ECB) meetings and the U.S. nonfarm payrolls report.
At the time of writing, the EUR/USD pair is trading at the 1.0850 area, 0.17% below its opening price, having retreated from a daily high of 1.0913.
Data released on Monday showed that the German economy grew at an annualized pace of 1.1% in the last quarter of 2022, missing expectations of 1.3%.
At the same time, inflation came in higher than expected in Spain, with the Harmonized Consumer Price Index growing by 5.8% in the 12 months to January, according to the preliminary reading, above the 4.8% expected and above the 4.7% December rate.
This is the first increase in the Spanish inflation rate since July. Price pressures continue to fuel expectations that the ECB will proceed with a 50 bp rate hike on Thursday, as widely expected.
From a technical perspective, the EUR/USD holds a positive short-term bias according to the daily chart, despite signs of losing momentum over the last several sessions.
The pair is still trading close to multi-month highs and above its main moving averages, with pullbacks being viewed as corrective.
On the upside, the following resistance levels are seen at the nine-month peak high of 1.0929, followed by the 1.1000 psychological area.
On the other hand, the immediate support level stands at 1.0839, Monday’s low, followed by the 1.0800 mark, and the 20-day SMA at 1.0780.