EUR/USD sees steady gains amidst USD weakness, approaches multi-month highs

• The EUR/USD trading near the 1.0960 level with moderate gains on the day, steering towards highs since August.
• Before the European Parliament, Christine Lagarde sounded somewhat hawkish.
• No relevant reports other than minor housing data figures were seen during the session.

In Monday’s trading session, the EUR/USD pair is staging a climb, confidently edging northwards and flirting with multi-month highs near the 1.0960 area. The catalyst behind this positive momentum is the USD  trading vulnerable while the Euro got a boost after Lagarde’s hawkish words. On the data front, the US reported minor housing data, which saw New Home Sales from October from the US coming in lower than expected but didn’t trigger any significant reaction on the pair.

On the Euro front, during her address at the European Parliament, Christine Lagarde, the President of the European Central Bank (ECB), cautioned that headline inflation could experience a slight increase in the near future. Lagarde also noted that economic growth is expected to remain weak. In addition, he didn’t give any clues on how long the bank will maintain rates at a restrictive level or a time frame of when it will cut rates.

For the rest of the week, the highlights of the pair will be on Thursday when Eurostat will release the Harmonized Index of Consumer Prices (HICP) from the Euro area and the US will report the Core Personal Consumption Expenditures Index (PCE) from October, the Federal Reserve (Fed) preferred’s gauge of inflation. In that sense, both inflation figures will likely shape the expectations of the ECB and the Fed, impacting the short-term trajectory of the pair.

EUR/USD levels to watch

The daily chart’s technical indicators exhibit bullish signals but flash reversal warnings. The Relative Strength Index (RSI) is nearing overbought levels – signalling a potentially temporary overheat in the buying momentum. However, the Moving Average Convergence Divergence (MACD) demonstrates rising green bars, highlighting an underlying buying enthusiasm.

Despite the short-term outlook in which the bulls may consolidate gains, the pair resides above the 20, 100, and 200-day Simple Moving Averages (SMAs), indicating that buyers continue to dominate price action on a broader scale. 

Support Levels: 1.0900, 1.0850, 1.0800.
Resistance Levels: 1.0965, 1.1000, 1.1050.

EUR/USD daily chart