EUR/USD Forecast: The light at the end of the tunnel may be a truck coming to run down the Euro

The EUR/USD is trading around $1.1880, up on the day and further away from the new 2018 low of $1.1822 recorded on Wednesday. The main factor pushing the pair higher is a breather that the US Dollar has taken. A mix of profit taking, the previous not-so-great data (such as the NFP), and some relief that the Iran deal is not fully falling apart halt the greenback from extending its gains.

In the euro-zone, there have not been any extraordinary data releases. Almost all the economic gauges published lately have come out below expectations, sending the euro down. So, no news is good new.

Did the EUR/USD bottom out at $1.1822? Is there light at the end of the tunnel?

Or is this light coming from a 10-ton truck coming to run over the Euro once again? 

A lot depends on the US Dollar side. The US inflation report. After the US finally saw the Core Consumer Price Index cross the 2% YoY mark in March and reach 2.1%, a drop to 1.9% is on the cards. The Fed is keen to raise rates but inflation will have to keep up in order for Powell to keep pressing forward. If core inflation holds onto 2%, the truck may meet the common currency.

See How to trade the US Inflation Report with EUR/USD

EUR/USD Technical Analysis

The EUR/USD is significantly off the lows and may also be about to exit the steep downtrend channel it has plunged through. The pair still has downward Momentum but the oversold conditions as expressed by the RSI could help it recover. 

Support awaits at $1.1822, the new 2018 low and also very close to the late December trough of $1.1817. Further below, $1.1715 was a stepping stone on the way up in later 2017 and $1.1610 is far below. 

On the upside, $1.1915 was a low point in January and now serves as resistance. It is followed by the round number of $1.2000 and the April 30th low of $1.2055. 

See: US CPI Preview: fresh clues for the Fed