EUR/USD Forecast: gearing up for another leg of up-move back towards multi-year tops
|On Wednesday, the EUR/USD pair quickly reversed US CPI-led knee-jerk slide to an intraday low level of 1.2276 and rallied around 190-pips to finish the day higher for the third consecutive session. The US Dollar gained some positive traction following the release of stronger-than-expected US inflation figures, which bolstered bets that the Fed might raise interest rates four times in 2018. The uptick, however, turned out to be short-lived and the buck resumed with its well-established downtrend, lifting the pair back closer to the key 1.2500 psychological mark.
The pair consolidated overnight strong gains and was seen oscillating in a range above mid-1.2400s through the Asian session on Thursday. There isn't any major market-moving economic data due from the Euro-zone and hence, the USD price dynamics would continue to act as an exclusive driver of the pair's momentum through the European trading session. Later during the day, the US economic docket, featuring the release of latest PPI print, regional manufacturing data, usual initial weekly jobless claims and industrial manufacturing data, would now be looked upon for some immediate respite for the USD bulls.
From a technical perspective, the pair on Wednesday did slip below a short-term ascending trend channel but then witnessed a sharp recovery to confirm resumption of the prior appreciating trend. Hence, from current levels, the pair remains poised to head towards reclaiming the 1.2500 handle before eventually darting towards 3-year tops resistance near the 1.2535-40 region. A follow-through buying interest has the potential to continue lifting the pair further towards its next major hurdle near the 1.2600 handle, marking 61.8% Fibonacci retracement level of 1.3991-1.0341 downfall.
On the flip side, immediate support is now pegged near mid-1.2400s, below which the pair could correct back towards the ascending trend-channel resistance break-point, now turned support, currently near the 1.2430 region. Any subsequent weakness is likely to find fresh buying interest and might now be limited by the 1.2400 handle.
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