• A lengthy consolidation may result in a volatility expansion ahead.
• Advancing 50-and 200-EMAs support bullish bias for EUR/USD.
• The RSI (14) has returned to the 40.00-60.00 range after failing to sustain inside the bullish range.

The EUR/USD pair has delivered a wild gyration in a 30-pips range above 1.0650 in the early Tokyo session. The major currency pair is gaining traction as investors are returning to trading arsenal after celebrating New Year.

On Tuesday, the Euro is likely to dance to the tunes of German Harmonized Index of Consumer Prices (HICP) data. According to the consensus, the German HICP (Dec) will escalate to 11.8% vs. the former release of 11.3%. Meanwhile, the US Dollar Index (DXY) is expected to display volatile moves as investors are shifting their focus toward the release of the Federal Open Market Committee (FOMC) minutes.

EUR/USD is auctioning in a 1.0576-1.0736 range on a four-hour scale for the past three weeks. A lengthy consolidation usually results in a volatility contraction that brings wide ticks and heavy volume in the counter.

The major currency pair has rebounded after dropping around the 50-period Exponential Moving Average (EMA) at 1.0650. Also, the 200-EMA at 1.0500 is advancing, which indicates that the upside trend is still solid.

Meanwhile, the Relative Strength Index (RSI) (14) has returned to the 40.00-60.00 after failing to sustain in the bullish range of 60.00-80.00.

For an upside move, the asset needs to break above December 15 high at 1.0736, which will drive the major towards June 9 high at 1.0774 followed by the round-level resistance at 1.0800.

On the flip side, a breakdown of December 19 low at 1.0576 will drag the asset towards December 7 high around 1.0550. A slippage below the latter will expose the asset for more weakness towards December 9 low around 1.0500.

EUR/USD four-hour chart

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• Source: https://www.fxstreet.com/news/eur-usd-price-analysis-consolidation-continues-ahead-of-german-inflation-202301030013