EUR/USD Forecast: Draghi’s speech might cap the bullish momentum

The US Dollar bears came back into action on Tuesday after the latest US inflation figures dampened expectations of aggressive Fed rate hike moves in 2018. The selling pressure aggravated on news of Rex Tillerson's ouster as the US Secretary of State. The two primary supporting factors helped the EUR/USD pair to build previous session's modest rebound from sub-1.2300 level. The USD continued losing ground through the Asian session on Wednesday and was being weighed down by the US President Donald Trump's plan to impose tariffs on China. 

The pair is now looking to extend the bullish momentum further beyond the 1.2400 handle as investors now look forward to the ECB President Mario Draghi's speech at the ECB conference in Frankfurt. Later during the early NA session, the US economic docket, featuring the release of monthly retail sales and Producer Price Index (PPI), would influence the USD price dynamics and provide some meaningful impetus. 

Having softened in the previous month, consumer spending is projected to have bounced back in February. In case of any disappointment, investors would turn skeptic over the possibilities of even three Fed rate hikes in 2018 and prompt some additional USD weakness.

With short-term technical indicators moving back into positive territory, the pair seems more likely to head back towards retesting the 1.2445-50 heavy supply zone, albeit Draghi’s dovish comments could cap the bullish sentiment. However, a convincing break through the mentioned barrier would set the stage for a retest of the key 1.25 psychological mark hurdle. 

On the flip side, any meaningful retracement now seems to find immediate support near the 1.2360-55 region, below which the pair could slide back to test sub-1.2300 level (1.2280-75 support area) before eventually dropping to the 1.2200 handle. 

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