EURUSD may suffer a bearish correction as the pair could need the additional catalyst to challenge the 1.1900 mentioned barrier
The euro has been climbing for the fifth session in a row on Wednesday, extending the local recovery from the 20-DMA that was briefly derailed last week. EURUSD is trading just below the 1.1900 critical point, a break above which is needed for a bullish extension in the short term.
The pair has barely reacted to the Eurozone CPI data that came in line with the preliminary estimate of +0.2%, confirming subdued inflation pressure in the region. Elsewhere, ECB Governor Christine Lagarde said on Tuesday that despite the upbeat news on the coronavirus vaccine, the central bank was still ready to deliver additional supportive measures to the European economy. Despite dovish remarks, the euro extended the ascent, being driven by dollar weakness.
The USD index remains on the defensive as traders keep a cautious tone even, with stock markets showing mixed dynamics these days due to some conflicting signals including the incoming economic data. Of note, US retail sales came in lower than expected in October, adding to signs that the country’s economy could struggle further amid the ongoing pandemic.
From the technical point of view, EURUSD may suffer a bearish correction as the pair could need the additional catalyst to challenge the 1.1900 mentioned barrier, a break above which would pave the way towards the 1.2000 handle. In case of a local reversal, the common currency may derail the 1.1840 local support and challenge the 1.1800 figure as a result. However, downside risks remain limited as long as the prices stay above the 20-DMA, today at 1.1786.
As of writing, the euro was changing hands around 1.1872, up just 0.10% on the day. On the positive side, the daily RSI is still pointing north in the neutral territory, suggesting there is still room to the upside in the near term.