The pair EUR/USD trades virtually unchanged in a quiet session on Monday as US stock and bond markets remain closed in observance of the Independence Day holiday. The pair currently hovers around the 1.0420 area, just a few pips below Friday’s closing price.
EU economic data came in mixed. The EU Producer Price Index rose by 36.3% YoY in May, below market expectations but still showing tremendous price pressures. In addition, the German Trade Balance in May printed a € 1 billion deficit, missing the market’s forecasts of a € 2.4 billion surplus, while the Sentix Investor Confidence printed a sharp decline in July.
Investors’ attention remains on inflation pressures, and recession prospects as central bankers walk the tightrope trying to tighten monetary policies in the correct dose, enough to cool down prices but not too much that leads to an economic slowdown.
From a technical perspective, the EUR/USD holds a short-term bearish bias according to the daily chart, with the price trading below its main moving averages and indicators standing in negative territory.
The RSI gained some slope but held below its midline, while the MACD rests below its signal line but printed a lower red bar.
The following support levels are at 1.0349, May 13 cycle low, followed by the 1.0300 psychological level. On the other hand, to regain bullish momentum, the buyers will seek to recover the 1.0500 level, which could pave the way to advance toward the 20-day SMA currently at 1.0525 and then to the 1.0600 area, where the psychological level is being reinforced by a descending trendline drawn from the YTD high.