EUR/USD: Why the path of least resistance is down, levels to watch
Two steps forward, one step back, and now another upswing? Not so fast. Euro/dollar has benefited from some calm in markets, yet that may change when trading on Wall Street begins. Concerns about inflation have been weighing on stocks – especially highly valued shares of tech companies – and there may be more room for the downside.The most significant concern is inflation. Investors thought that the Federal Reserve would stay lower for longer after the disappointing Nonfarm Payrolls report. However, high producer prices from China and some hawkish comments from Robert Kaplan, President of the Dallas Fed, changed their minds.And now, a fresh fall in stocks could boost the safe-haven dollar and send EUR/USD back down.The euro has issues of its own. Despite the eurozone’s accelerating vaccination campaign, members of the European Central Bank are pushing back against the idea of tapering bond buys, implying more euro-printing.While EUR/USD has room to fall on Tuesday, the moves may remain limited. Tensions remain elevated ahead of Wednesday’s all-important Consumer Price Index (CPI) figures from the . Will inflation surge or remain tame? The release will likely trigger high .EUR/USD Technical AnalysisEuro/dollar is trading above the 50, 100 and 200 Simple Moving Averages and benefits from upside momentum on the four-hour chart. On the other hand, the Relative Strength Index (RSI) is near 70. That means that any upside move could be limited if it sends the indicator above that level – thus entering overbought conditions.Resistance awaits at the May peak of 1.2180, followed by 1.2240 and 1.23, levels last seen early in the year.Support is at 1.2150, the April peak, and then at 1.2125 and 1.2075. Further down, 1.2050 and 1.2015 await EUR/USD bears.