EUR/USD Daily Forecast – Euro Consolidates in a Tight RangeAfter 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.
US GDP Data Failed to Trigger Much Volatility
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.
- EUR/USD has lost some downside momentum after posting three consecutive days of losses.
- A pattern on an hourly chart is worth watching as it can signal a bit of a pullback.
- If the pair pulls back, I’m looking to get short. I see resistance at 1.1170 which is near the inverted head and shoulders target completion.