As the third week of January unfolds, the EUR/USD pair remains in a state of uncertainty, oscillating around the 1.0963 mark.
Investor attention is largely fixated on the Federal Reserve's interest rate decisions. Following the release of the Consumer Price Index data last Friday, there has been growing skepticism in the market about the Fed's likelihood of reducing the interest rate in March, amidst ongoing concerns about whether inflation rates will start to systematically decline.
Presently, the anticipated trend of decreasing inflation is being intermittently interrupted by consumer spending patterns. This could potentially lead to a delay in the Fed's rate adjustment plans, possibly extending to April or May. While such a postponement might bode well for the US dollar, it generally poses unfavorable implications for the stock market.
EUR/USD technical analysis
In the H4 timeframe for EUR/USD, a consolidation phase is evident around the 1.0955 level. This pattern is largely seen as a correction following a previous downward trend. Anticipated is the formation of an upward movement, potentially reaching at least 1.1010. Upon completion of this rise, a new downward wave towards 1.0833 might commence. If this level is breached, there could be a further decline within the prevailing trend, targeting 1.0638 as a local objective. The MACD indicator provides technical support for this scenario, with its signal line below zero and the histogram above zero, both indicating a strong upward momentum towards new highs.
On the H1 chart for EUR/USD, the consolidation around 1.0955 continues without a clear directional trend. The market is currently forming an upward structure towards 1.0977. Once this price level is reached, a subsequent decline back to 1.0955 (testing from above) could occur, followed by another rise towards the local target of 1.1010. This outlook is technically validated by the Stochastic oscillator, with its signal line nearing 80 and poised to drop towards 50.
By RoboForex Analytical Department
Disclaimer
Any forecasts contained herein are based on the author's particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.
