EUR/USD: Teasing a bearish close below the 50-month SMA

• The bears may feel emboldened if the pair ends today below the 50-month SMA of 1.1396.
• The sentiment is quite bearish as the EUR posted losses yesterday, despite strong German inflation.
• The focus is on the Eurozone inflation numbers and the US employment cost index, scheduled for release at 10:00 GMT and 12:30 GMT, respectively.

Currently, the EUR/USD is trading at 1.1340 – below the 50-month simple moving average (SMA) of 1.1396.

In the last five months, the dips to or below the SMA have been short-lived. Hence, it is the key level to beat for the bears. Should the pair close below the 50-month SMA today, then the bears will likely feel emboldened. Moreover, it would mean a resumption of the sell-off from the February high of 1.2556.

More importantly, the bearish sentiment in the EUR/USD market is quite strong. This is evident from the fact that the common currency closed in red yesterday, despite the strong German inflation reading, which backed Draghi's stimulus exit plans.

As a result, the pair is more likely to suffer a bearish close today. The bearish case may strengthen further if the US employment cost index beats estimates, signaling a pick-up in wage-price inflation. An above-forecast Eurozone CPI may offer some relief, however, the for the EUR to find bids, the US employment cost index needs to miss estimates by a big margin.

EUR/USD Technical Levels