EUR/USD: Choppy sub-1.2350 ahead of German CPI, Powell speech
- Yield differential remains in focus.
- Supported by subdued DXY.
- Eyes on German CPI and Fed’s Powell.
The bears continue to guard the 1.2350 barrier, leaving the EUR/USD pair confined within a 25-pips narrow range so far this session, as all eyes remain on the German CPI and the new Fed Chair Powell’s testimony for the next direction.
EUR/USD: ‘Super Political Sunday’ jitters cap the upside
The spot extends its range-play for the fifth straight session today, although remains well supported above the 1.23 handle amid subdued trading activity seen around the US dollar across the board. Powell’s testimony is expected to reiterate the same scripts of gradual rate hikes going forward, which is unlikely to offer any lift to the USD.
However, the bulls lack commitment, as they remain wary over the looming political events scheduled in Germany and Italy this Sunday. Meanwhile, yesterday’s cautious comments delivered by the ECB President Draghi on the Eurozone inflation outlook widens the US-DE yield spread and thus, keeps a check on the EUR’s upside.
In the meantime, attention now turns towards the German CPI and US durable goods release for fresh trading impetus. Although the reaction to the data may be limited, as the main risk event for today remains Powell’s speech.
EUR/USD levels to watch
Haresh Menghani, Analyst at FXStreet, notes: “From a technical perspective, traders are likely to wait for a decisive break through the 1.2260-1.2360 trading range before positioning for the next leg of directional move. On a sustained move beyond the 1.2360 hurdle, the pair seems all set to reclaim the 1.2400 handle before eventually darting towards challenging an important supply zone near the key 1.2500 psychological mark. Alternatively, a convincing break through the 1.2280 level, leading to a subsequent weakness below 1.2260 level is likely to accelerate the fall towards the 1.2200 strong horizontal support.”