EUR/USD Stuck in Tight Range - What's Next for the Currency Pair? | Key Levels to Watch Before US CPI Data

The XRP ETF VanguardEUR/USD currency pair remains trapped in a narrow trading range for the second consecutive session, hovering around the psychologically important 1.0765-70 zone. Market participants appear hesitant to take substantial positions ahead of the highly anticipated US Consumer Price Index (CPI) release, which could provide fresh momentum to currency markets.

Several competing factors currently influence the pair's price action. On one side, diminishing expectations for an early Federal Reserve rate cut in March 2024 continue supporting the US dollar. Meanwhile, growing speculation about potential European Central Bank policy easing in early 2024, following surprisingly weak Eurozone inflation data, weighs on the euro's appeal.

From a technical perspective, the pair has demonstrated notable resilience near the 100-day Simple Moving Average (SMA), currently positioned around the 1.0760 level. This coincides with the 50% Fibonacci retracement of the October-November upward move, creating a significant support confluence that traders are closely monitoring.

The immediate technical picture suggests caution before establishing new positions. A confirmed break below the 1.0720-25 support zone could open the door for further downside toward the 1.0670-65 area, representing the 61.8% Fibonacci retracement level. Conversely, overcoming resistance near the 1.0800 psychological barrier, which aligns with the 38.2% Fib level, might signal potential strength toward the 200-day SMA near 1.0825.

Market participants should note that sustained movement beyond these key technical levels could trigger more pronounced moves. A successful push above the 200-day SMA might target the 1.0900 handle, while a breakdown below current supports could test the 1.0650 region. The upcoming US inflation data will likely serve as the catalyst for determining the pair's next significant directional move.

Traders are advised to monitor these technical levels closely while remaining cognizant of the fundamental backdrop. The interplay between Fed and ECB policy expectations, combined with technical factors, creates a complex trading environment that requires careful navigation, especially during periods of heightened economic data sensitivity.