EUR/USD marches firmly towards 1.1600 amid a risk-off market mood

• The shared currency recovers from early daily losses close to 1.1600.
• US PPI index rose a tick more than expected, but investors are focused on Wednesday CPI readings.
• EUR/USD: A double-bottom coupled with a positive divergence in the daily chart could propel the pair towards higher prices.

The EUR/USD is steady during the day, failing to extend its two-day rally, is trading around 1.1590 in the last hour.

The shared currency bounced off daily lows around 1.1570 during the day as US bond yields fell sharply during the New York session, acting as a headwind for the greenback. Nevertheless, gains could be capped as the US Dollar Index is recovering, closing to the 94 figure, losing 0.08% at 93.98 at press time.

US PPI steady around 8.6% on an annual basis

On Tuesday, the US economic docket inveiled the Producer Price Index (PPI) for October, which in its headline expanded by 0.6%, higher than the 0.5% estimated by economists. On a year-over-year figure, the PPI increased 8.6%, in line with the forecast. Further, the Core PPI for the same period on a monthly basis rose by 0.4%, a tad higher than expected, whereas the annual basis number came in line with estimations at 6.8%.

The report released by the Bureau of Labor Statistics (BLS) noted that higher energy costs drove the gain on wholesale prices. Furthermore, it mentioned how recent months, transportation bottlenecks, material shortages, and increasing labor costs sent prices surging across the economy.

The EUR/USD pair reaction was muted, albeit being a US inflation report, investors' focus is on the consumer inflation readings.

On Wednesday, the US economic docket will feature the Consumer Price Index (CPI) for October, in which market participants are focused on, as the Federal Reserve dovish tone spurred a sell-off in the bond market, while US Treasury yields fall. Also, the Initial Jobless Claims for the week ending on November 6 will be revealed.

The Eurozone economic docket will unveil inflation figures for Germany, and Bundesbank Weidmann will cross the wires. Further, the ECB will host a Non-monetary policy meeting.

 EUR/USD Price Forecast: Technical outlook

The daily chart depicts that a double-bottom pattern could be forming in the shared currency. The 1.1524 price level unsuccessfully tested six times acts as a floor for the EUR/USD pair, but on the upside, the 1.1616 is the barrier to overcome, on its way towards the "neckline" of the double-bottom at the October 28 high at 1.1691.

The Relative Strength Index (RSI) is at 47, slightly up, but remains below the 50-midline indicating that selling pressure remains. However, there is a subtle positive divergence, with the RSI showing higher lows, while the EUR/USD price action prints lower lows, meaning that the RSI acts as a leading indicator to the pair. Nevertheless, to resume the near-term upward bias, the RSI needs to break above the 50-central line to accelerate the uptrend.