On the sidelines of the U.S. / China inflation data, EUR/USD was bought, extending its rally since the start of the week.

The 200-index moving average and two-week uptrend line provide short-term support.

The bullish MACD signal and the gradual rise in the relative strength indicator kept the bulls looking forward.

The key Fibonacci retracement level becomes an upside target, depending on the Consumer Price Index and the Consumer Price Reconciliation Index.

The euro/dollar held firm for a second straight day on Tuesday, topping an intraday high near 1.0765, as traders braced for a rollercoaster ride following events including U.S. inflation and key central bank events.

In the process, EUR/USD continued the previous day's rally from the 10-day exponential moving average (EMA), while verifying that the MACD signal bullish and relative strength indicator (14) bullish are not now overbought.

In this way, EUR/USD buyers have enough ability to test the 50% Fibonacci retracement of the January-April uptrend (around 1.0790).

After that, the late May trading range high near 1.0830 and the 38.2% Fibonacci retracement near 1.0865 will act as further upward resistance to confirm bullish momentum.

On the other hand, the prospect of EUR/USD retracement remains uncertain as long as it stays above the 10-index moving average near 1.0745. More importantly, the 200-index moving average and two-week uptrend support line converge near 1.0690, creating strong bearish resistance.

If bears break below the support level of 1.690, the upside support around 1.0645 extended from January 2023 will be targeted.

Overall, EUR/USD is likely to remain firm unless it breaks below 1.0690. Also supporting euro buyers are divergent market expectations for the European Central Bank (ECB) and the Federal Reserve.