- The EUR/USD pair maintains a bullish bias ahead of the US Inflation data.
- A valid breakout above the downtrend line could bring new long opportunities.
- Only a major bearish reversal pattern could invalidate an upside continuation.
Our EUR/USD forecast sees the pair retreating a little in the short term as the Dollar Index has rebounded. Technically, the temporary correction seems over but we still need confirmation before taking action on this market. The currency pair maintains a bullish bias despite the temporary retreat.
Though, the US inflation data could really shake the price, anything could happen later, that’s why you have to be careful. In the short term, a temporary decline was natural and expected after its amazing rally. It was expected to come back to test and retest the immediate support levels before jumping higher.
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Fundamentally, the US inflation data could be decisive in the short term, the volatility could be high, the EUR/USD pair could register sharp movements.
The Consumer Price Index could register a 0.4% growth in January, after 0.5% growth in December, while the Core CPI may report a 0.5% growth versus 0.6% in the last reporting period.
Moreover, the Unemployment Claims could drop from 238K to 227K in the last week which could be good for the USD.
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EUR/USD Forecast: Price Technical Analysis – Continuation Formation
From the technical point of view, the EUR/USD pair tries to escape from the down channel’s pattern. This formation is seen as a bullish one, but we still need confirmation.
As you can see, it has retested the 78.6% retracement level and the 1.14 psychological level where it has found support. 1.1373 – 1.1382 represents a support zone as well.
A valid breakout above the downtrend line, through the channel’s resistance may activate further growth. 1.1482 higher high is seen as a major and strong resistance level.
In my opinion, the retreat could bring new long opportunities, but you have to be careful as the rate could register only false breakouts above the immediate obstacles.
A new higher high, jumping, and closing above the 1.1482 could validate an upside continuation. Only a major bearish reversal pattern could announce that the upwards movement ended.
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