FX.co ★ EUR/USD

EURUSD Chart Review: Today's article discusses the current price movement of the EUR/USD pair. The first resistance level in the bull market is 1.16406 (the high on May 30). A break below this level would target 1.17556 (1.16406/0.9535, or 50%). Fibonacci retracements are important resistance levels. Meanwhile, the daily highs and lows (1.14766/1.14746, respectively) provide strong support and limit the upward momentum. A break below these levels would weaken the short-term structure and push the price down towards support levels. The main support level is 1.13376 (the low on January 6). US CPI data may offer some clues about the short-term price direction. By Wednesday morning, the euro had recovered from the effects of the ceasefire and was trading higher. A complete rebound from the January low (1.15600/1.13376) would be the first sign of a sustained recovery since the 2022 low (0.9535).

However, analysts warn that the market remains overbought. The lack of European economic data is likely to contribute to a slowdown. US inflation is expected to fall from 7.1% in November to 6.5% in December. This suggests that further easing of price pressures will begin to influence the Federal Reserve's (FRB) excessive inflation policy to tighten, paving the way for further monetary easing and a weaker dollar. Such a scenario would be favorable for the euro. On the other hand, if the US Consumer Price Index (CPI) comes in higher than expected, the euro will be under pressure as the FRB is warning of further, and possibly more, tightening. Now, the bulls are losing momentum, and a technical correction is expected to begin. However, such signals only appear when the price falls below the support levels of 1.14456 and 1.14756.