EUR/USD Price Analysis: Still limited below 1.0600 level, focus on ECB rate decision

• EUR/USD remains limited below the 1.0600 barrier pending key developments.
• A key resistance level lies in the 1.0600-1.0610 area; the initial support level is observed at 1.0566.
• The Relative Strength Index (RSI) is in the 40-60 zone, suggesting a lack of direction.

The EUR/USD pair halts a two-day winning streak during the early hours of the European session on Monday. Markets await the European Central Bank’s (ECB) interest rate decision on Thursday, with no changes in rates expected. Markets anticipate that the ECB’s rate hike cycle has ended, but it will not be until at least July 2024 when it begins to relax, while the battle against high inflation continues. At the time of writing, the pair is down 0.15% on the day and is trading at 1.0577.

From a technical point of view, the EUR/USD pair remains range-bound on the four-hour chart. The pair remains above the 50 and 100 EMAs, but the long-term average is above the short-term average, indicating that the upside is favorable.

The 1.0600-1.0610 zone acts as a key resistance level for the pair. The mentioned level represents the confluence of the upper limit of the Bollinger Bands, a round psychological level, and the October 20 high. If it breaks above that region, a recovery towards the next barrier at 1.0635 (October 11 high) will occur. The other bullish filter to watch is 1.0671 (September 22 high), followed by 1.0735 (September 20 high).

On the downside, the initial support level for EUR/USD is seen near the 50-period EMA at 1.0566. Critical support will emerge at 1.0525, which represents an October 18 low and a lower boundary of the Bollinger Bands. Further down, the round level at 1.0500 will be the next support to the downside. Breaking this last level would cause a fall to 1.0450 (October 4 low).

That said, the Relative Strength Index (RSI) is in the 40-60 zone, suggesting the lack of clear direction in the pair.

EUR/USD 4-hour chart