EUR/USD Analysis: Evaluating Trends and Potential Outcomes

EUR/USD is currently exhibiting a neutral stance as the market awaits US CPI inflation data. Despite this, the short-term upswing remains intact, although risks persist below the 1.0968 mark.

Analyzing the Current Situation

EUR/USD has encountered resistance beneath the 50% Fibonacci retracement level of the 2020-2022 downtrend, positioned at 1.0945. This resistance became evident following a flash spike on Friday, which halted near the 1.0980 level, aligning closely with the resistance trendline from May 2021.

Anticipating Market Volatility

The imminent release of US CPI inflation data, scheduled for 12:30 GMT, is expected to introduce fresh volatility into the market. Presently, the 50% Fibonacci retracement level of the recent downturn fosters optimism regarding potential upward movement in price. However, caution is advised, considering the southward shift observed in both the RSI and the Stochastics, indicative of a weakening bullish bias.

Potential Scenarios

Should EUR/USD surpass the 23.6% Fibonacci level at 1.0968 and close above the psychological barrier of 1.1000, it could pave the way for continued recovery towards the range of 1.1045-1.1070. Subsequently, the pair may aim for the 1.1100 level or higher, with further potential towards the 1.1150 area.

Conversely, a downside correction below 1.0916 might prompt a descent towards the 38.2% Fibonacci level at 1.0865, coupled with the short-term support trendline. Further downward movement could find support at the 200-day SMA, followed by the 2020 constraining ascending line, before reaching the 23.6% Fibonacci retracement level at 1.0800. A breach of this level could trigger additional selling pressure, driving the pair towards the 1.0740-1.0760 territory.

Conclusion

EUR/USD currently operates within a neutral territory, prompting traders to exercise patience until a decisive move occurs. Key levels to monitor include a close above 1.0945-1.1000 or below 1.0916, which will likely dictate market sentiment and direction moving forward.? Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.