Why Is EUR/USD Sliding? ECB Rate Decision & US CPI Data Hold the Key

EUR/USD Faces Downward Pressure Ahead of Major Economic Events

The trump coin binanceEUR/USD currency pair exhibited modest declines during Monday's trading session, retreating from the psychologically significant 1.0600 level following last week's technical rejection. Market participants are adopting cautious positions ahead of two pivotal events: Thursday's European Central Bank (ECB) rate announcement and Wednesday's US Consumer Price Index (CPI) inflation report.

Market Sentiment and Economic Indicators

European economic data continues to paint a concerning picture, with December's Sentix Investor Confidence survey plunging to -17.5, marking its lowest point in over a year. This deteriorating sentiment reinforces market expectations that ECB policymakers will implement 25 basis point reductions to both the Main Refinancing Rate and Deposit Facility Rate during this week's meeting.

Across the Atlantic, the Federal Reserve Bank of New York's latest consumer survey revealed contradictory trends in economic expectations. While respondents expressed improved outlooks for personal finances and government fiscal health following recent political developments, they simultaneously raised inflation projections to 3.0% for the coming year.

Technical Outlook and Price Action

The daily chart illustrates EUR/USD's persistent bearish trend, with the pair trading comfortably below both the 50-day (1.0703) and 200-day (1.0828) exponential moving averages. After establishing a multi-month low near 1.0450 in mid-November, price action has entered a consolidation phase characterized by limited directional conviction.

Key resistance between 1.0600-1.0650 continues to cap upside attempts, while support at 1.0450 remains critical for preventing further declines. The most recent candle's indecisive close near 1.0554 reflects ongoing market uncertainty, with traders awaiting clearer signals from fundamental developments.

Momentum Indicators and Potential Scenarios

While the MACD histogram shows tentative signs of improving momentum, the indicator remains in bearish territory overall. A sustained break above 1.0600 accompanied by increasing volume could signal the beginning of a more substantial recovery, potentially targeting the 1.0700 area. Conversely, failure to hold above 1.0500 may accelerate downward movement toward recent lows.

Market participants should prepare for potential volatility surrounding Wednesday's US CPI release and Thursday's ECB decision. The inflation report's deviation from consensus forecasts could significantly impact Greenback valuation, while the ECB's guidance on future policy direction may determine the Euro's medium-term trajectory.