The EUR/USD currency pair moved back to an even stance on Monday, giving up its earlier upward momentum as investors adopted a cautious approach ahead of upcoming Eurozone economic growth figures. Market participants are closely watching both regional data releases and monetary policy signals from major central banks.
Growth and Inflation Metrics
Investors are eagerly awaiting preliminary second-quarter Gross Domestic Product data covering both Germany and the broader Eurozone economy. Economists forecast that Eurozone GDP will expand 0.2 percent quarter-on-quarter, recovering from a previous contraction of 0.2 percent. On an annual basis, growth is projected to tick up to 0.4 percent from the prior reading of 0.3 percent.
Attention is also focused on Germany's preliminary July Consumer Price Index figures. Monthly consumer inflation is anticipated to rise by 0.7 percent, rebounding from a 0.3 percent decline, while annual inflation previously stood at 2.3 percent. Heightened price pressures could reinforce expectations that the European Central Bank will maintain a restrictive monetary stance, which would potentially provide support for the shared currency.
Technical Outlook and Chart Levels
Analyzing the 4-hour chart, the currency pair trades near 1.1372, maintaining a bearish near-term bias as it remains capped underneath the 20-period Simple Moving Average positioned around 1.1391 and the 100-period SMA near 1.1420. Momentum indicators remain subdued, with the 14-period Relative Strength Index hovering at 41, pointing to weak buying interest and keeping the market focused on downside risks while prices stay below the layered resistance cluster.
On the topside, initial resistance is spotted at 1.1375, followed by 1.1386 and a denser barrier near 1.1391 where a horizontal level coincides with the 20-period SMA, ahead of the 100-period SMA at 1.1420. On the downside, immediate support rests at 1.1369. A definitive break beneath this floor could trigger an extension of the current downward phase, whereas holding above it would keep the pair confined within a corrective consolidation pattern.
Broader Market Movements
In related currency action, the British Pound pared its Friday gains and fell below the 1.3300 threshold to touch multi-week lows. Declining crude oil prices following a pause in Middle East hostilities, combined with soft domestic inflation readings, appeared to weigh against potential tightening measures from the Bank of England. Meanwhile, hopes of a geopolitical de-escalation in the Middle East offered some underlying support to the EUR/USD pair, though uncertainty lingers regarding whether a lasting diplomatic solution can be achieved.
