The EUR/USD exchange rate has remained in a tight range in the past few weeks as traders focused on the actions by the Federal Reserve and the European Central Bank (ECB). It ended last week at 1,1600, inside a range it has been in the past few months.
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Key US and EU Data to Shed Light on ECB and Fed Actions
The EUR/USD pair has moved sideways in the past few months. On the one hand, it is largely expected that the European Central Bank (ECB) will maintain interest rates unchanged as inflation remains near the 2% target.
At the same time, it is unclear what the Federal Reserve will do in the next meeting. While odds of a cut have soared on Polymarket, whether the bank cuts or holds steady will depend on just two officials, including Jerome Powell.
The EUR/USD pair will react to several important catalysts this week. The first one will come out on Monday, when Eurostat publishes the flash inflation report for November. Estimates are that the headline CPI rose from 2.1% in October to 2.2% in November.
Core inflation, which excludes the volatile food and energy prices, is expected to come in at 2.5% from the previous 2.4%. These numbers, while higher than ECB’s 2.0%, will likely not change it mind to pause.
The other top numbers to watch from Europe will be the manufacturing and services PMIs, GDP, and retail sales data. A few ECB officials like Philip Lane and Cipollone will talk.
On the other hand, the US will publish some notable numbers, including the September PCE inflation data and initial jobless.
EUR/USD Technical Analysis
The weekly chart shows that the EUR/USD exchange rate has been in a tight range in the past few months. It has remained above the strong pivot reverse point of the Murrey Math Lines tool.
The pair has slowly formed a bullish flag pattern, which is a common continuation sign. This pattern is made up of a vertical line and a descending channel. It is also slightly above the 50-week and 100-week moving averages.
Therefore, the pair will likely have a bullish breakout in the near term. Such a move will push it to the ultimate resistance level of the Murrey Math Lines tool at 1.1720. A drop below the lower side of the flag will invalidate the bullish outlook.
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