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EUR/USD holds firm near the 1.1600 figure on Wednesday amid a scarce economic docket in both sides of the Atlantic as market participants await a delayed US Consumer Price Index (CPI) report, to be released on Friday.

Euro’s muted price action amid scarce data, lingering uncertainty around trade

The pair trades with minimal gains of 0.05% at the time of writing, while the US Dollar Index (DXY), which measures the American currency's performance against other six, dives 0.04% at 98.92.

Geopolitics are dominating the narrative of the financial markets, as US-China trade tensions remain high, while the lack of resolution of the Russia–Ukraine conflict weighs on the shared currency. The cancellation of the Putin-Trump meeting in Budapest caps the advance of the Euro.

Alongside this, Reuters reported that the US is considering "curbs on exports to China made with US software,” suggesting that risk aversion could drive EUR/USD lower.

The US government has remained shut for 22 days, and shows no signs of progress, even though Democratic House Leader Hakeem Jeffries hopes that they can get the shutdown resolved by the end of October.

In Europe, the European Central Bank (ECB) member MartinsKazaks said that it may well be the case that the next rate move could be as easily a hike as a cut, according to Econostream Media.

Ahead this week, the US docket will feature S&P Global Purchasing Managers Indices (PMIs) on Friday, along with the release of September’s CPI. In Europe, Flash PMIs for major economies will offer clues regarding the global monetary policy outlook.

Daily market movers: Euro's capped by geopolitics

• Reuters revealed that “The Trump administration is considering a plan to curb a dizzying array of software-powered exports to China, from laptops to jet engines, to retaliate against Beijing's latest round of rare earth export restrictions, according to a US official and three people briefed by US authorities.”
• Market participants are waiting for the release of the US CPI ahead of next week’s Federal Reserve monetary policy decision. The US central bank is expected to cut rates 25 basis points to the 3.75% - 4% range, with traders already pricing an additional 0.25% reduction for the December meeting.
• Next week, the ECB is expected to hold rates unchanged, with odds standing at 98%.

Technical outlook: EUR/USD neutral to bearish biased, further downside expected

EUR/USD’s technical picture has shown mild improvement but remains neutral to bearish, trading below the confluence of the 100-day Simple Moving Average (SMA) and 20-day SMA at 1.1656. The Relative Strength Index (RSI) has slipped below the neutral 50 line, a signal that bears are gaining traction.

Immediate support is located at 1.1600, followed by 1.1550 and 1.1500. A break beneath these levels would expose the August 1 cycle low near 1.1391. On the upside, resistance is seen at the confluence of the 100-day SMA and the 20-day SMA, followed by 1.1700. A sustained move above the latter clears the way to 1.1800 and the July 1 high at 1.1830.

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