EUR/USD heads for fifth positive weekly close as it sits comfortably above 1.18

The EUR/USD pair took advantage of the USD sell-off in the NA session on Friday and turned positive on the week above the 1.18 mark. As of writing, the pair was trading at 1.1825, gaining 55 pips, or 0.46%, on the day. 

The initial reaction to the softer-than-expected CPI data from the U.S. pushed the US Dollar Index below the 93 handle in the early trading hours of the American session. Although the index was able to shake off the bearish pressure, it struggled to hold above the 93 mark as the sharp fall witnessed in the Treasury-bond yields weighed on the greenback. In the second half of the session, the index slumped to its lowest level since last Friday at 92.84. As we move closer to the end of the week, the index is moving sideways near 92.90, losing 0.4% on the day.

With today's rise, the pair is looking to close the week above the critical 200-WMA, which is located at 1.1775, suggesting that the short-term corrective retreat is losing momentum.

The economic calendar won't be offering any data that could potentially impact the price action on Monday. If the geopolitical tension between the United States and North Korea continues to escalate over the weekend, the greenback could face further pressure as the higher demand for safe-haven T-bonds would drag their yields lower.

Technical outlook

Valeria Bednarik, Chief Analyst at FXStreet, writes, "in the daily chart, the price held above a bullish 20 SMA, despite a couple of attempts to break lower, while the Momentum indicator heads south within positive territory, but the RSI is already regaining the upside, currently at 63, somehow indicating the bearish pressure has begun to ease."

"The weekly low was set at 1.1688 the immediate support for the upcoming week, followed by 1.1610, July 26th daily low. Below this last, the pair will be undoubtedly at risk of correcting further lower, with the 1.1460 region becoming a probable bearish target. 1.1830 is on the other hand, the immediate resistance ahead of 1.1909, the yearly high. An advance above this last should push the pair up to 1.2000, while sustained gains beyond this last should support a steeper advance up to the 1.2160 price zone," she further adds.

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