EUR/USD Forecast: Upward corrective movement up to 1.1120

The EUR/USD pair had a nice comeback this week, surging up to 1.1041 in a short lived rally following FED's disappointing statement. Following a 400 pips retracement from the mentioned level, the pair regained the upside, aiming to close the week around the 1.0800 figure, as the dollar got dumped partially following the US Central Bank comments on how a strong currency may keep inflation lower, and therefore limiting chances of a rate hike in the US. The dollar is down against most of its rivals by the end of the week, but calling for a bottom may be a bit premature, according to long term charts.

Let's take a look at the weekly one: the pair is closing below previous week opening, and below the 38.2% retracement of its latest bearish run around 1.0865, while the technical indicators are bouncing from extreme oversold levels, still far from signaling an upward continuation, even in corrective mode. Furthermore, the 61.8% retracement of the same decline stands at 1.1120, meaning that the EUR can extend up to that level, without actually harming the dominant bearish trend, considering we are talking just about this year decline and not about the whole fall from around 1.40. Nevertheless, the 1.1120 has become now a line in the sand, as stops are right now building up above the level and if triggered, the pair can continue rallying up to 1.1533, this year high, albeit not next week. Therefore, 1.0685 the Fibonacci level, 1.1040, this week high, and 1.1120, another Fibonacci level, are the critical resistances for this week.

To the downside, post FED low is the level to follow, the 1.1610 price zone, as if below, the dollar may resume its bullish tone and retest the 1.0460 level next week.

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