EUR/USD Forecast: bearish H&S formation on daily chart

On Thursday, the EUR/USD pair retreated sharply from 7-day tops after the ECB's updated inflation forecast for 2020 failed to match some analysts’ expectations. This coupled with resurgent US Dollar demand, supported by better-than-expected US economic data, further aggravated the selling pressure and the pair reversed a major part of its post-FOMC up-move. 

Meanwhile, the USD uptick turned out to be short-lived, amid some renewed uncertainty over the Republican-led tax cut bill and helped the pair to bounce off 50-day SMA support during the Asian session on Friday. The recovery move, however, seemed lacking conviction in a rather lackluster trading action on the last trading day of the week. 

In absence of any major market moving economic releases from the Euro-zone, broader market sentiment surrounding the greenback would continue to act as an exclusive driver of the pair's momentum through the European session. Later during the data, the release of Empire State Manufacturing Index, Industrial Production/Capacity Utilization Rate from the US would also be looked upon for some short-term trading impetus.

From a technical perspective, the pair now seems to be forming a bearish head & shoulders chart pattern on daily charts, with neck-line support near the 1.1715 region. Only a decisive break below the mentioned support would confirm a bearish break and turn the pair vulnerable to extend its downward trajectory in the near-term.

Meanwhile, on the upside, 100-day SMA, currently around the 1.1800-1.1805 region, now seems to act as immediate resistance, above which the uptick could get extended towards 1.1825 horizontal resistance ahead of mid-1.1800s. Only a decisive move beyond the said hurdles would negate the bearish pattern and pave the way for additional near-term up-move.