EUR/USD Forecast: fall to sub-1.18 level seems more likely, US CPI and retail sales in focus

The EUR/USD pair regained some fresh traction during Asian session on Friday and recovered majority of its previous session's pull-back from near 3-week tops. The up-move was being supported by the latest news report, via Bloomberg, that ECB is considering cutting its bond purchase program to 30 billion Euros/month from January 2018. The headlines largely negated the ECB President Mario Draghi's overnight comments that policymakers expect rates to remain at present levels for an extended period of time and well past the horizon of net asset purchases.

Meanwhile, a mildly softer tone around the US Dollar, despite a set of better-than-expected US economic data released on Thursday, further collaborated to the pair's uptick on the last trading day of the week. With the markets still assessing the latest FOMC meeting minutes, focus shifts to the latest consumer inflation figures and the key monthly retail sales data. Against the backdrop of the latest PPI print, which recorded the biggest gain since February 2012, another upbeat reading would the USD bulls back in a dominant position. 

From a technical perspective, the pair failed to move past 1.1880 hurdle, marked by 50% Fibonacci retracement level of the pair's recent corrective slide, and subsequently broke below a short-term ascending trend-channel. Thursday's price action indicated that the pair remains poised to resume with its near-term corrective slide. 

Hence, today's modest uptick from 38.2% Fibonacci retracement level support is likely to fizzle near the trend-channel support break-point, now turned resistance, near the 1.1860 region. Any up-move beyond the mentioned hurdle might continue to confront strong supply near the 1.1880 level, which if cleared might negate any near-term bearish bias. 

Meanwhile, on the downside, sustained weakness below 1.1830-25 immediate support now seems to drag the pair below the 1.1800 handle towards its next support near the 1.1770 region, nearing 23.6% Fibonacci retracement level. A follow through weakness is likely to get extended towards its next support near the 1.1725-15 region.