Bulls maintain pressure ahead of critical US inflation data

EUR/USD Current price: 1.1181

• According to preliminary estimates, German inflation declined further in September.
• The United States will release the September Nonfarm Payrolls report.
• EUR/USD is once again retreating from around 1.1200, but the bears have nothing to do.

The EUR/USD pair traded at 1.1208 during European hours on Monday, amid continued US dollar weakness. Financial markets are optimistic after news from China last week, when the Asian giant announced measures to stimulate the economy, combining monetary and fiscal support. Moreover, monetary easing from central banks and hopes that interest rates will continue to fall supported sentiment.

The macroeconomic calendar will be quite busy this week, with a focus on European inflation and employment in the United States (US). So far, Germany has released the preliminary estimate of the September Harmonized Consumer Price Index (HICP), which rose 1.8% over the past 12 months, up from 2% the previous month. On a monthly basis, the HICP fell by 0.1%.

The American session will include a speech by Jerome Powell, Chairman of the Federal Reserve (Fed). In terms of data, the US will release the Chicago Purchasing Managers’ Index (PMI) and September’s Dallas Fed Manufacturing Business Index for the same month.

Short-term technical outlook for EUR/USD

The EUR/USD pair fell from the aforementioned high ahead of the US open, but held on to intraday gains. In the daily chart, the risk is upward. The pair is mainly developing its moving averages, with the 20 Simple Moving Average (SMA) heading north around 1.1110, providing dynamic support. The 100 SMA, meanwhile, extends its advance above a flat 200 SMA, both well below the shorter ones. Technical indicators, meanwhile, maintain their upward slope within positive levels, in line with another leg to the north, should the pair finally cross the 1.1200 resistance area.

In the short term, and according to the 4-hour chart, EUR/USD offers a neutral to bullish stance. Technical indicators are directionless, albeit well above their centerline and with no signs of upside exhaustion. At the same time, the pair is mainly developing its moving averages, with the 20 SMA lying flat around 1.1160. The longer moving averages, meanwhile, maintain their upward slope below the shorter ones, limiting the chance of a steeper decline.

Support levels: 1.1160 1.1110 1.1075

Resistance levels: 1.1200 1.1250 1.1290

(This story was corrected at 1325 GMT on September 30 to say ‘US employment data’ in the headline instead of ‘US inflation data’ as previously stated)