EUR/USD Price Analysis: Remains capped below the 1.0600 mark, all eyes on ECB rate decision

EUR/USD remains capped under the 1.0600 barrier ahead of the key events.
A key resistance level is located at the 1.0600-1.0610 region; the initial support level is seen at 1.0566.
The Relative Strength Index (RSI) is in the 40-60 zone, suggesting a lack of direction.

The EUR/USD pair snaps a two-day winning streak during the early European session on Monday. Market players await the European Central Bank (ECB) Interest Rate Decision on Thursday, with no rate change expected. The markets anticipate ECB’s rate hiking cycle is over, but it won’t be until at least July 2024 before it begins easing as the battle against elevated inflation rattles on. At the press time, the major pair is losing 0.15% on the day to trade at 1.0577.

From the technical perspective, the EUR/USD pair sticks to the range-bound theme on the four-hour chart. The major pair holds above the 50- and 100-hour Exponential Moving Averages (EMAs) but the long-term average is above the short-term average indicating further upside looks favorable.

The 1.0600-1.0610 region acts as a key resistance level for the major pair. The mentioned level represents the confluence of the upper boundary of Bollinger Band, a psychological round mark, and a high of October 20. A decisive break above the latter will see a rally to the next barrier at 1.0635 (high of October 11). The additional upside filter to watch is 1.0671 (high of September 22), followed by 1.0735 (high of September 20).

On the downside, the initial support level for EUR/USD is seen near the 50-hour EMA at 1.0566. The critical contention will emerge at 1.0525, portraying a low of October 18 and a lower limit of the Bollinger Band. Further south, a round figure at 1.0500 will be the next downside stop. A breach of the latter will see a drop to 1.0450 (low of October 4).

That being said, the Relative Strength Index (RSI) is located in the 40-60 zone, suggesting a non-directional movement in the pair.