In the midst of anticipation surrounding the European Consumer Price Index (CPI) announcement, the EURUSD currency pair has been locked in a sideways trading pattern, hinting at potential volatility ahead. Over the past 2 to 3 trading sessions, EURUSD has formed a symmetrical triangle chart pattern, reflecting market indecision as traders await the crucial CPI figures.
Economists have forecasted a modest 2.4% for the EUR CPI, aligning with the previous figure. However, there is an air of uncertainty as some economists anticipate a flat CPI reading. This divergence in expectations has added to the anticipation surrounding the upcoming release.
Adding further complexity to the situation are mixed signals emanating from key technical indicators. While long-term indicators suggest a bullish bias, with the Exponential Moving Average (EMA) 50 positioned above the EMA 200. Medium-term indicators paint a contrasting picture, the Moving Average Convergence Divergence (MACD) indicator's signal line has dipped below the 0 level, indicating a bearish momentum, while the Relative Strength Index (RSI) has slipped into bearish territory, registering below the 40% mark.
Market analysts suggest that the convergence of these conflicting signals could pave the way for substantial movement in the EURUSD pair post the CPI announcement. A higher-than-expected CPI could potentially trigger a bullish breakout, leading to an upward breach of the symmetrical chart pattern. Conversely, a CPI figure lower than forecast could prompt a bearish breakout, driving the currency pair downwards.
Traders and investors alike are advised to exercise caution and closely monitor the CPI release, as it is likely to set the tone for EURUSD trading in the near term. The combination of technical indicators and fundamental factors underscores the potential for significant price action in the currency markets following the news.
Forecast 2.4% vs Previous 2.4%
Forecast 0.3% vs Previous 0.6%
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