The Euro (EUR) maintains the bullish bias unchanged against the US Dollar (USD), prompting EUR/USD to hover around the 1.0940 region, or three-month tops, so far on Monday. Meanwhile, the Greenback’s performance, as reflected in the USD Index (DXY), remains negative and tests the key 200-day SMA in the 103.60 region during the European morning. The persistent downtrend in the Dollar comes amidst marginal moves in US yields across the curve, against the backdrop of increasing speculation regarding potential interest rate cuts by the Federal Reserve (Fed) in spring 2024. This speculation has been fueled by weaker-than-anticipated inflation indicators (CPI and PPI) released last week. In the domestic docket, Producer Prices in Germany contracted 0.1% MoM in October and 11.0% over the last twelve months.

In the US, the only release of note will be the Leading Index tracked by The Conference Board. EUR/USD keeps the optimism well and sounds well north of 1.0900 at the beginning of the week. Immediately to the upside for EUR/USD comes the weekly high of 1.0945 from August 30, ahead of the psychological level of 1.1000. Further north, the pair might come into contact with the August top of 1.1064 (August 10) and another weekly peak of 1.1149 (July 27), all preceding the 2023 high of 1.1275 (July 18). Occasional bearish moves, on the other side, should meet initial support at the critical 200-day Simple Moving Average (SMA) at 1.0805, seconded by the temporary 55-day SMA at 1.0644. South from here emerges the weekly low of 1.0495 (October 13) prior to the 2023 low of 1.0448 (October 3). Looking at the big picture, the pair’s prospects should remain positive as long as it trades above the 200-day SMA.