The EUR/USD pair continued its bullish correction today, a movement that began yesterday. The currency pair appears to have found support at the 200-period Exponential Moving Average (EMA), a critical indicator for market trends. Today, traders are keenly observing the release of the German Consumer Price Index (CPI) data, which holds significant implications for the pair's future movement. Economists are forecasting an improvement in the year-on-year CPI figures and a lower month-on-month CPI. Should both data points exceed forecasts, it is likely that the bullish sentiment for the EUR/USD will persist.
On the hourly chart, the EUR/USD appears to have solidified support at the 200-period EMA. Despite this, confirmation of a continued bullish trend requires a break above the recent swing high at 1.08796, marked by a purple rectangle on the chart. Conversely, a decline below the key support level at 1.08343, indicated by a red rectangle, could signal a bearish reversal.
The current positioning of the 50-period EMA above the 200-period EMA suggests a prevailing bullish sentiment. However, it is important to note that the 50-period EMA is currently slanting towards the 200-period EMA, indicating a potential slowdown in bullish momentum. For momentum to return, prices need to climb back above the 50-period EMA, and the 50-period EMA itself must resume its upward trajectory away from the 200-period EMA.
The Ichimoku Cloud indicator presents a more nuanced picture. The market is trading sideways as evidenced by the Tenkan-sen crossing below the Kijun-sen line and prices entering the cloud. A definitive bullish trend continuation would be signaled if prices move above the cloud and the Tenkan-sen crosses back above the Kijun-sen.
In terms of momentum indicators, both the MACD and RSI are currently reflecting bearish sentiment in the short to medium term. The RSI indicates bearish conditions when it falls below 40% and remains within the 40%-60% range. If the RSI breaks above 60%, it would shift to a bullish sentiment. The MACD has also entered bearish territory, indicated by the signal line crossing below the zero line.
Overall, the EUR/USD is at a critical juncture, with the upcoming German CPI data playing a pivotal role in determining whether the current bullish sentiment will prevail or if the market will reverse course. Traders will be closely monitoring these economic indicators to gauge the future direction of the currency pair.
Forecast 2.4% vs Previous 2.2%
Forecast 0.2% vs Previous 0.5%
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