EUR/USD sticks to modest gains near mid-1.19s, waits for next catalyst

The EUR/USD pair is moving in a relatively tight 50-pip trading range on Monday amid a lack of fresh catalysts. As of writing, the pair was at 1.1955, gaining 15 pips, or 0.13%, on the day.

Today's data from euro area showed that the consumer inflation grew by 0.3% on a monthly basis in August after contracting 0.5% in July, keeping the annual CPI steady at 1.5%, both figures meeting the market estimates. However, the core CPI, which strips the volatile food and energy prices, came in at 1.3% on a yearly basis, surpassing the market expectation of 1.2%, ramping up the expectations of the ECB announcing a QE tapering at the October meeting. Fueled by the data, the shared currency gained strength against its competitors, pushing the EUR/USD pair to a daily high at 1.1970.

Later in the day, the positive market sentiment allowed the US Treasury-bond yields to rise, providing a boost to the greenback. The US Dollar Index tested the 92 handle during the second half of the NA session, forcing the pair to give back the majority of its daily gains. At the moment, the index is in a consolidation phase at 91.80, still adding 0.15% on the day.

Tuesday's economic docket from the euro area will feature Current Account and Construction Output data. Moreover, Zew is going to publish the Economic Sentiment figures for Europe and Germany. However, ahead of Wednesday's important FOMC meeting, the price action could remain subdued as investors are likely to refrain from taking large positions on the back of these data. 

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "Technically, the 4 hours chart shows that the price is currently developing a few pips above its 20 and 100 "SMAs, with the shortest heading south below the largest, whilst technical indicators hover within positive territory with modest downward slopes, all of which indicates limited buying interest. Sellers have been capping advances around the 1.2000 level, with a clear break above the level required to confirm additional gains towards the 1.2030/60 region."

According to the analyst, near-term supports for the pair could be seen at 1.1910, 1.1870 and 1.1825 while resistances align at 1.1995, 1.2030 and 1.2060.

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