Baxia Markets
May 31, 2024

EURUSD in Sideways Trade Awaiting EU CPI and US Core PCE Data

market analysis header image
The EURUSD pair is currently navigating a bearish sentiment, having recently tested the key resistance level between 1.08518 and 1.08359, marked by an orange rectangle. Now, the pair is challenging the key support zone at 1.08181 to 1.08095, highlighted in a purple rectangle. The market is oscillating within this range, and a breakout on either side could establish a definitive trend.

Yesterday's US data release, which included a lower-than-forecast GDP, triggered a bullish rally throughout the day, only to encounter resistance. Market participants are now focusing on today's critical economic indicators: the CPI in the European Economic Zone, the US Core PCE Price Index, and the Chicago PMI. Positive news from the EU combined with mixed data from the US could propel the recent bullish rally, potentially breaking the key resistance and reversing the sentiment to bullish. Conversely, strong US data coupled with disappointing EU CPI results could intensify the bearish trend, driving EUR/USD below the key support level.EURUSD-3

Technically, the sentiment remains bearish as indicated by the EMA 50 and 200 indicators, with the EMA 50 positioned below the EMA 200. The Ichimoku Cloud provides a nuanced view; despite the Tenkan-sen line being above the Kijun-sen line, both lines are below the cloud, suggesting a bearish pullback rather than a full-fledged bearish trend.

Oscillator indicators like the MACD and RSI are also pointing towards a bearish sentiment as EUR/USD approaches the key support zone (purple rectangle). However, over the past two to three days, these oscillators have fluctuated between bullish and bearish zones multiple times, reinforcing the earlier sentiment that the market is currently trading sideways.

The EURUSD market's direction hinges on the forthcoming economic data. Should the EU release favorable CPI numbers while the US data presents a mixed picture, we could see a continuation of the bullish rally, breaking through the resistance and potentially shifting the sentiment to bullish. On the other hand, if US data exceeds expectations and EU CPI disappoints, the bearish trend may deepen, driving the EUR/USD below the current support levels.

In summary, the EURUSD pair is at a critical juncture, with key support and resistance levels being tested amid a backdrop of economic uncertainty. Traders and investors should closely monitor today's economic releases to gauge the next directional move in the market. The technical indicators suggest a bearish pullback within a broader sideways trend, making the upcoming data releases pivotal in determining the pair's future trajectory.

Key Takeaways

  1. EUR/USD is testing key support between 1.08181 and 1.08095.
  2. Market is oscillating between key resistance at 1.08518-1.08359 and support.
  3. Positive EU CPI and mixed US data could trigger a bullish reversal.
  4. Strong US data and weak EU CPI may deepen bearish sentiment.
  5. Technical indicators show a bearish sentiment with potential for sideways movement.

Key Economic Releases to Watch Today


Actual 2.6% vs Forecast 2.5% vs Previous 2.4%

USD, Core PCE Price Index (YoY)

Forecast 3.70% vs Previous 2.00%

CAD, GDP Annualized (QoQ)

Forecast 2.2% vs Previous 1.0%

USD, Chicago PMI

Forecast 1.6% vs Previous 3.4%




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