EURUSD is coiling ahead of Wednesday’s Producer Price Index (PPI), which promises to be a market mover.
The pair is trading within the same 1.0780 to 1.0870 range I mentioned on Saturday.
Those are the two key levels traders will be watching following Wednesday’s PPI.
However, if tested, the previous range highs at 1.0700 will also attract bulls.
Another significant factor in the EURUSD equation is the US Dollar Index (DXY), which is hovering above the 101.30 confluence of support.
That’s the intersection of the May 2022 swing low and a descending trend line from November 15th.
The 101.30 region is also macro support for the DXY, dating back to late 2016.
So the recipe for a dollar bounce later this week exists, but tomorrow’s PPI numbers will be the determining factor.
As for EURUSD, trading the pair before a break will be difficult, given the tight conditions.
But a daily close above the December 2016 trend line from Saturday’s forecast at 1.0870 would attract fresh longs toward 1.1120.
Alternatively, a daily close back below 1.0780 and 1.0700 would be bearish toward 1.0480.
Traders must respect the EURUSD uptrend, though. Until we see signs of fatigue, the short-term momentum favors bulls.