EUR/USD: the potential crossing of moving averages is under scrutiny

Helped by the prospect of a short pause in the Fed's aggressive turn this year, the EUR/USD continued to develop a rebound that was already rich in technical ground. The leading currency pair is now in the process of tracing a triangle in contact with a 50-day moving average (in orange), which is still negatively biased. This is a real test, even as new inflation data will feed into the traders' calendar this week.

In the absence of a benchmark from Wall Street on Monday due to a public holiday (Memorial Day), variations should remain within narrow margins, in a market that continues to focus on inflation. In this respect, relief was notable on Friday with PCE prices in line with expectations across the Atlantic.

"China will also continue to attract the attention of the trading rooms as the gradual lifting of restrictions continues. We are now in the process of lifting restrictions," says Vince Boy (IG France), "with the prospect that the worst is behind us [...]. For example, the country has announced the lifting of some restrictions in Shanghai and Beijing, as well as new support measures, which could this time have a positive effect on the markets." And thus on risk appetite, which the Euro accurately reflects.

DeStatis is due to publish new German inflation figures later today: the preliminary consumer price index for the month just ended.

Right now, the pair is trading at $1.0765.

KEY CHART ELEMENTS

The ongoing test of the 50-day moving average (orange) is important. For now, the energy is not dissipating, and we will hold on to a potential crossover of notable moving averages to trigger a buy alert. For now, traders will prefer to stay out of the spot.

MEDIUM TERM FORECAST

Based on the key chart factors we have mentioned, our medium-term view on the EUR/USD is neutral.

We will maintain this neutral view as long as the EUR/USD is positioned between support at $1.0454 and resistance at $1.0855.