EUR/USD Daily Forecast – Euro Consolidates in Bull FlagEUR/USD edged lower after a failed break above the 1.1200 and is consolidating within a bullish flag.
EUR/USD Might Revert to Range Trading
EUR/USD has shown upward momentum since hitting a low at the start of the fourth quarter of 2019. However, the pair appears to have stalled a bit this week after meeting resistance just above the 1.1200 handle.
The pair continues to show upward potential, but this might not occur in a straight line. Recall that EUR/USD is a pair that is notorious for holding ranges, especially over the last year and a half or so. The price action during the holidays was the opposite, the pair displayed a lot of volatility and made directional moves with minimal pullbacks. But this is not typical for the pair and a potential path from here might be a range between 1.1100-1.1200 over the next few weeks.
Euro data is expected to be released shortly and it stands to have an impact on the exchange rate. The latest CPI figures will be released as well as retail sales numbers. Later in the day, the US non-manufacturing index is scheduled which is also likely to accompany a volatile response.
On an hourly chart, EUR/USD appears to be forming a bullish flag pattern which hints of upside potential.
The pair posted a bullish engulfing candle at the European open which suggests strength. However, the upcoming CPI and retail sales release can alter that quite quickly. If the data dissapoints.
An upside break above the flag pattern, roughly 1.1195 or so would target a move back towards recent highs. Resistance for the session ahead is found at 1.1215 followed by 1.1225.
To the downside, support is found near the lower bound of the bullish flag pattern. Currently in around 1.1066.
Although the pair continues to signal upside momentum, a break below 1.1150 would tend to shift the near-term bias to bearish.
The daily close will also be important. EUR/USD posted a reversal candle on Friday and there was follow-through yesterday. However, the pair has given up about half of yesterday’s gain thus far. A daily close below 1.1170 would offer a bearish signal.
- EUR/USD is consolidating in a bullish flag pattern after showing upward momentum since Friday.
- A break above 1.1195 would activate the flag pattern.
- The first support for the session ahead falls at 1.1166.