EUR/USD Holds Above Key Support Levels Ahead of US Inflation Data

EUR/USD remains trapped in an extended consolidation phase below its fresh 3½-month high of 1.1711, while holding firmly above the recently breached Fibonacci barrier at 1.1648, representing the 61.8% retracement of the 1.1849-1.1324 decline. This keeps the broader bullish outlook intact despite early warning signals from the long upper shadows seen on Thursday and Friday’s daily candlesticks, which suggest some profit-taking near recent highs.

Technical indicators continue to favor the upside, with daily studies maintaining strong positive momentum. Multiple bullish moving-average crossovers remain in place, while the convergence of the 10-day and 200-day moving averages is on course to produce a golden cross, reinforcing the constructive medium-term outlook.

Any near-term pullback should ideally remain contained above the key Fibonacci support at 1.1648, with losses limited ahead of the 200-day moving average at 1.1627. Such a move would likely represent a healthy correction before buyers reassert control and target higher levels, including 1.1725, the 76.4% Fibonacci retracement, followed by the psychologically important 1.1800 area, which coincides with the lower boundary of the early-May trading range.

Attention now turns to the release of the US July PCE Price Index, the Federal Reserve’s preferred inflation measure, later today, as well as Fed Chair Warsh’s speech at the Jackson Hole Symposium on Friday. Both events are expected to provide further clues on the future direction of US monetary policy.

The euro could gain additional support if inflation figures come in softer than expected and policymakers signal a more dovish policy stance. Conversely, stronger-than-forecast inflation data would likely reinforce the US dollar by reducing expectations for near-term policy easing.

Res: 1.1687; 1.1711; 1.1725; 1.1800
Sup: 1.1648; 1.1627; 1.1614; 1.1586