- EUR/USD holds above 21-DMA starting out a light week on Monday.
- US dollar attempts a bounce despite a corrective pullback in Treasury yields.
- The pair awaits a symmetrical triangle breakout on the daily sticks.
EUR/USD is moving back and forth in a 25-pips trading range so far this Monday, lacking a clear directional bias amid holiday-thinned markets and uncertainties surrounding the Omicron covid variant worldwide.
Thursday’s US PCE inflation is likely to back the Fed’s hawkish shift on rate hikes next year, underscoring the Fed-ECB monetary policy divergence. The ECB policymakers continue to rule out a 2022 rate hike.
Looking at EUR/USD’s daily chart, the price is extending its range play within a month-long symmetrical triangle formation.
Currently, EUR bulls remain hopeful so long as they defend the critical 21-Daily Moving Average (DMA) at 1.1300.
With the 14-day Relative Strength Index (RSI), however, inching lower below the 50.00 level, a downside breakout from the ongoing range trade cannot be ruled.
A sustained break below the 21-DMA could trigger a fresh sell-off towards the rising trendline support at 1.1242.
The triangle breakdown will get confirmed on a daily candlestick closing below the latter, opening floors towards the yearly lows of 1.1186.
EUR/USD: Daily chart
On the flip side, if the 21-DMA support holds, then bulls can re-attempt the falling trendline resistance at 1.1346.
A sustained move above the latter, EUR/USD will confirm an upside breakout from the symmetrical triangle formation.
Buyers could then initiate a fresh upswing towards the bearish 50-DMA at 1.1405.