EUR/USD Forecast: door still open for bears, focus on US CPI

On Monday, the EUR/USD pair quickly reversed a dip to sub-1.2300 level and built on its post-ECB modest rebound amid some follow-through US Dollar weakness. Friday's mixed US jobs report, especially sluggish wage growth data, now seems to have dampened expectations of aggressive Fed rate hike moves in 2018 and continued weighing on the greenback. 

The uptick stalled near mid-1.2300s and the price action now reflects some repositioning trade ahead of the latest US consumer inflation figures, due for release later during the early NA session. A hotter-than-expected print would revive worries about steep Fed monetary policy tightening cycle and should obviously trigger a sharp USD rally. On the other hand, a weaker-than-expected headline CPI print should assist the pair to gain some positive traction and build on its steady climb. 

From a technical perspective, the pair is retracing from an important resistance marked by a short-term ascending trend-channel on the 1-hourly chart. Any subsequent weakness might continue to find some fresh buying interest at the trend-channel support, near the 1.2300 handle, below which the pair seems more likely to extend its near-term downward trajectory towards testing the 1.2200 handle. 

On the flip side, the trend-channel resistance, currently near mid-1.2300s, might continue to act as an immediate resistance, above which a fresh bout of short-covering is likely to accelerate the up-move back towards reclaiming the 1.2400 handle.