EUR/USD could struggle to extend its recovery in the short term

After having registered modest gains on Monday, EUR/USD has stretched higher and climbed above 1.0200. Nevertheless, euro recovery is set to remain limited ahead of Wednesday's key data releases, FXStreet’s Eren Sengezer reports.

Investors might remain on the sidelines ahead of key data

“Ahead of the inflation data from Germany and the US on Wednesday, market participants could refrain from betting on further euro strength.”

“EUR/USD is closing in on 1.0230, where the Fibonacci 38.2% retracement of the latest downtrend is located. Even if the pair manages to rise above that level, it could meet strong resistance at 1.0250 (200-period SMA on the four-hour chart). Only a four-hour close above that level could be seen as a bullish development and open the door for an extended recovery toward 1.0300 (psychological level, Fibonacci 50% retracement).”

“Initial support is located at 1.0200 (100-period SMA, 50-period SMA). If sellers flip that level into resistance, 1.0150 (Fibonacci 23.6% retracement) and 1.0100 (psychological level, static level) could be seen as the next bearish targets.”