After three consecutive daily declines, EUR/USD appears to have fallen into a range near lows for the month. A potential inverted head and shoulders pattern may be forming on the smaller time frames. I think this pattern is worth keeping an eye on in the session ahead.
First quarter growth in the United States was reported to increase at an annualized 3.1%. This was slightly lower than the prior estimate of 3.2%. The data did not have a sustained impact on the exchange rate.
In North American trading today, inflation figures will be released out of the United States. Though the Personal Consumption Expenditure Index is the Fed’s preferred gauge of inflation, the release tends to have a muted response in the currency markets.
The 4-hour chart above clearly shows the sideways price action that has taken place since early North American trading on Wednesday.
There was some fairly important support at 1.1135. Although buyers did not immediately respect the level. At the same time, I don’t see a clear break as the price has just been trading around it.
This general area is quite important considering a roughly 25 pip decline from current levels would lead to a fresh monthly and yearly low.
If the exchange rate does break lower, the next level I have my eye on for support is 1.1097.
On an hourly chart, a potential inverted head & shoulders pattern is developing. The neckline falls slightly below initial resistance at 1.1144. If the pattern is activated, upside targets fall around 1.1165.
Jignesh has 8 years of expirience in the markets, he provides his analysis as well as trade suggestions to money managers and often consults banks and veteran traders on his view of the market.