EUR/USD: 1.1100 marks key support ahead of US CPI data

• With US CPI figures due, EUR/USD retains its gains around 1.1222.
• Falling oil prices continue to exert considerable pressure on the US Dollar.
• October’s US CPI release is firmly in investors’ sights.

Falling oil prices are easing elevated global inflation expectations and weighing on the US Dollar (USD). Against this backdrop, the Euro (EUR) retains the previous day’s advance around 1.1222 during Tuesday’s Asian trading session, leaving the major currency pair on a firm footing.

WTI Oil is trading close to $84.65, the low reached on Monday that marked its weakest level in over two months. At the time of writing, the US Dollar Index (DXY), a measure of the Greenback against six major currencies, remains near 101.67 after the previous day’s losses.

Dollar extends decline as falling oil and US-Iran deal hopes erode support

According to analysts at MUFG, pressure on the US Dollar persists, with the currency “continu[ing] to weaken by the sharp decline in the price of oil, which is helping to ease market concerns over upside inflation risks.” The analysts also said that “overall, the latest developments have clearly boosted investor optimism over the prospect of a deal to end the US-Iran conflict,” and argued that “a less prolonged energy price shock would help to dampen the case for a stronger US dollar.”

Expectations that the Federal Reserve (Fed) will maintain monetary tightening for a prolonged period are also likely to weaken as oil prices fall.

October’s United States (US) Consumer Price Index (CPI) figures, due at 13:30 GMT, are the next focus for investors seeking an updated picture of inflation. Wednesday’s headline US CPI reading is forecast at 3.9% year-on-year (YoY), up from 3.7% previously. Excluding volatile food and energy items, core CPI is likewise expected to rise, reaching 2.8% compared with the previous 2.6%.

For the Eurozone, meanwhile, cheaper oil provides support, as the continent is a major energy importer.

EUR/USD Holds Near Its 20-Day EMA

Trend outlook: With EUR/USD at 1.1223 on the daily chart, the pair remains close to its 20-day exponential moving average (EMA) of 1.1212. This leaves the near-term bias broadly neutral.

Momentum balance: Neither buyers nor sellers currently have a clear advantage, with the Relative Strength Index (RSI) reading of 48.97 close to its midpoint and signalling balanced momentum.

Downside support: Monday’s low of 1.1138 provides the first support level, followed by a more substantial floor at 1.1104. If the latter gives way, 1.1000 would come into view.

Upside resistance: The high of 1.1273 reached on 4 November appears to be the principal obstacle to further gains.

(The technical analysis of this story was written with the help of an AI tool. Know more.)