EUR/USD Forecast: bulls still need to take-out 2017 highs resistance near 1.2090

Haresh Menghani FXStreet

The shared currency rose sharply on Thursday after investors interpreted the ECB December monetary policy meeting minutes as bullish, which helped offset early US Dollar strength. The minutes revealed that the central bank would consider a gradual shift in guidance starting in early 2018 and saw some comfort in wage dynamics, albeit low inflationary pressure remains a concern.

The EUR/USD pair defended previous session's strong gains and touched a fresh weekly high level of 1.2067 during the Asian session on Friday. The up-move, however, now seemed losing steam ahead of 2017 yearly tops resistance as traders now look forward to a duo of important US macro releases for fresh impetus. Today's US economic docket features the release of consumer inflation figures and monthly retail sales data, with a positive surprise expected to provide some immediate respite for the USD bulls.

From a technical perspective, the pair still remains below the 1.2090-1.2100 region and only a sustained break through the mentioned barrier would pave the way for a resumption of the prior appreciating move. Momentum beyond the 1.2100 handle has the potential to lift the pair further towards its next major hurdle near the 1.2165 region before eventually lifting it to the 1.2200 round figure mark.

Alternatively, a reversal from current levels, leading to a subsequent retracement back below the 1.20 psychological mark might drag the pair back towards the 1.1965-60 support, marked by 23.6% Fibonacci retracement level of 1.1554-1.2089 recent up-move. A follow-through weakness might negate any near-term bullish bias and turn the pair vulnerable to break below 1.1930-25 intermediate support, and the 1.1900 handle, towards testing 38.2% Fibonacci retracement level support near the 1.1885-80 region.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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