EUR/USD Forecast: Temporary Calm Could Lead To Gains

• The EUR/USD is confined to a range at the 1.22 handle, starting off the week without any major moves.
• The current market mood and technical indicators point to a potential move higher

The new trading week has opened in a calmer tone. After a turbulent week on Wall Street and a very volatile Friday, stocks in the US ended slightly higher. This cautiously optimistic mood extended into Monday in both Asia and Europe. The economic calendar is quite light, adding to the tranquility. 

The most significant event of the week in Europe is the release of German GDP on Wednesday. It is set to confirm the upbeat growth picture in the old continent and provide the euro some support. The critical release coming out of the US is the inflation report, also on Wednesday. It can go either way. Tension is already mounting, but there is still enough time. 

EUR/USD Technical analysis: Looking up rather than down

The EUR/USD is trading in a relatively narrow range, within the 1.22 handle, capped below the round 1.23 level. At the other end, 1.22 provided support to the pair on Friday but has not been tested in the new week with 1.2240 serving as the low. This is the first hint that the pair is leaning higher rather than lower.

Other technical figures also look slightly positive. The pair maintains a safe distance from both the 50-day Simple Moving Average and the 200-day SMA. The same goes for two uptrend lines that are drawn on the chart. The steeper uptrend support line, colored in purple, is getting closer. It could serve as a place where the pair could bounce unless there is an unexpected event.

The RSI is also leaning higher. After falling from overbought territory, it managed to hold up above the balanced 50 level and is now marginally above it.

The last upbeat sign is the longer-term trend, which remains to the upside. All in all, if nothing significantly unexpected happens, the current calm leads to a higher chance that the pair will rise rather than fall.