The EUR/USD has traded in the borders of the previously drawn ascending channel pattern.
On Monday, the most notable fact to take into account was the support of the 55-hour simple moving average, which managed to stop the rate from declining.
The European Common Currency appreciated against the US Dollar, following the US CPI data release on Friday at 12:30 GMT. The EUR/USD exchange currency rate gained 13 pips or 0.11% right after the release. The Euro continued trading at the 1.1242 level against the US Dollar.
Bureau of Labor Statistics released the US CPI data, which came out worse-than-expected of 0.3% compared with expected 0.4%.
According to the release: "The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis after rising 0.4 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.0 percent before seasonal adjustment."
Minor data for EUR/USD
During this week there will be a couple of macroeconomic events, which are notable enough to impact currency exchange rates.On Tuesday morning, the UK Average Earnings Index will be published at 08:30 GMT. This event is the second to the Bank of England rate announcement. Historically the event has caused moves from ten to 24 base points on the GBP/USD.
On Wednesday, Aussie traders have to watch out for the Australian Wage Price Index publication at 01:30 GMT. It is the Australian equivalent of the UK Average Earnings Index.
During the same day, at 06:00 GMT and at 09:00 GMT GDP data will be published in the European Union. Namely, at 06:00 GMT watch the German Preliminary GDP release and at 09:00 GMT the flash EU GDP will be out.
These data sets are not the ones that usually cause big moves. However, during the recent months we have seen changes in that. The EU data has resumed to cause moves on the EUR pairs.
Also on Wednesday, the Canadian CPI and US Retail Sales will be published at 12:30 GMT. The CPI caused moves of 23 to 61 pips since December on USD/CAD. Meanwhile, the US retail sales have created moves from 12 to 40 base points on EUR/USD.
Early on Thursday, at 01:30 GMT the official Australian employment change will be published. The data is expected to cause a minor impact. This event is the last notable of the week.
Watch this week's economic calendar analysis and leave comments with questions about the specifics.
EUR/USD hourly chart's review
At the end of last week, the EUR/USD currency pair tested the upper boundary of the short-term ascending channel at 1.1250 and reversed south.From a theoretical point of view, the pair should target the lower channel line located in the 1.1200/1.1220 range. However, note, that the exchange rate has to surpass the support cluster formed by a combination of the 55-, 100– and 200-hour SMAs, as well the weekly and monthly PPs in the 1.1203/1.1223 range.
If the given support holds, it is expected, that the rate could trade sideways around the psychological level at 1.1240. If bulls prevail in the market, it is likely, that the pair could reach the 1.1250 level.
Hourly Chart
On the daily candle chart, there is additional information to take into account.
The 55-day simple moving average was strengthening the weekly R1 at 1.1270.
Daily chart
On Friday, on the Swiss Foreign Exchange 73% of the total open position volume was in short positions.
On Monday morning the sentiment became 75% short. More traders have gone short or some have closed their long positions.
Moreover, traders still expect the pair to decline. The recent surges did not cause a decline in the bearish sentiment
Meanwhile, trader set up pending orders in the 100-pip range were neutral. Namely, 51% of all orders were set to buy and 49% were set to sell.