European indices gained on Monday after a muted open, while futures tied to Wall Street indexes erased early losses and also moved higher which in turn puts pressure on the US dollar. Moods in the Old Continent improved after the European Commission lifted its economic outlook for both the European Union and the Euro Area, saying the blocs are about to avoid an anticipated recession, helped by falling gas prices, the ease of the energy crisis and a strong labour market. Meanwhile, the inflation forecast has been revised slightly downwards compared to autumn, mainly reflecting developments in the energy market. Headline inflation is forecast to fall to 5.6% in 2023 from 8.4% in 2022 and to 2.5% in 2024. According to the Commission, risks to growth are broadly balanced and those to inflation remain largely linked to developments in energy markets. As a result, ahead of the US session, the greenback weakened against the majority of G10 currencies. EURUSD bounced off the crucial support zone between 1.0661 and 1.0700, which is marked with previous price reactions and lower limit of the 1:1 structure. As long as the pair sits above, another upward impulse towards recent highs around 1.10 may be launched.
EURUSD, D1 interval. Source: xStation5
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Create account Try a demo Download mobile app Download mobile appUSDIDX - buyers struggle to break above the key resistance area around 103.50, which is marked with previous price reactions and lower limit of the 1:1 structure therefore another downward move may be launched. In this case, the nearest support to watch can be found around 100.60. On the other hand, if bulls manage to push price above aforementioned resistance, upward move may accelerate towards 105.30, which coincides with 38.2% Fibonacci retracement of the upward wave started in May 2021.
USDIDX, D1 interval. Source: xStation5
Besides Japanese yen, the US dollar is the worst performing G10 currency today. Source: xStation5
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