EUR/USD might break above 1.0550 on Monday during the European session. As the yields on US Treasury bonds go down, the currency pair may have gone up because of a pullback in the US Dollar across the curve.
The markets are worried that China’s rising number of COVID cases could hurt manufacturing and consumption in the world’s second-largest economy.
Before this week’s monetary policy announcements by the major central banks, uncertainty made people less willing to take risks. The Consumer Price Index (CPI) and interest rates from the Federal Reserve and the European Central Bank (ECB) will be the coming week’s focus.
The US Dollar Index dropped below 105.00 because the money seeking a safe place went into US government bonds.
EUR/USD has been in an uptrend since November 11, and bulls are now aiming for 1.0635.
The 14-day Relative Strength Index (RSI) stays above 50, so the price will likely go up further.
The 21-Daily Moving Average (DMA) crossed above the 200-Daily Moving Average (DMA), a bullish sign. It was confirmed last week.
Before trying to break through the technical resistance, buyers of the euro could get over the 1.0600 barriers.
Bulls will try to protect the bottom from December 7 at 1.0443 before testing the slightly bullish 21-day moving average at 1.0417.
Conclusion
EUR/USD could stay unstable until we know more about US inflation and what the central bank does.