EUR/USD Technical Analysis
EUR/USD is trading in a corrective downward trend on the 4-hour chart, with prices moving sideways on Monday. Prices currently hover around 1.1690. Below this sideways action lies a DFVG zone, which is likely to be tested before a potential bullish reversal for the euro.
Key Economic News
The U.S. Consumer Price Index (CPI) is among the most closely watched indicators for inflation. A reading above expectations will increase pressure on the Fed to raise rates, boosting the dollar and pressuring counterpart currencies like the euro, pushing EUR/USD lower. Conversely, a below-expected reading could lead the Fed to hold rates steady or even cut, weakening the dollar and favoring the euro.
If CPI prints in line with expectations, markets are likely to remain relatively stable, as there will be no surprises requiring immediate Fed action. In this case, the central bank will maintain a “data-driven wait-and-see” approach, keeping the dollar—and EUR/USD—range-bound until clearer signals emerge.
Liquidity Levels
Today, a rebound from the DFVG area is expected, supporting a bullish move on the 4-hour chart, targeting 1.1750, then 1.1790. Although prices may rally from current levels, it is advisable to wait for the CPI release to avoid excessive risk.
Invalidation Scenario
The bullish setup will be invalidated if a 1-hour candle closes below 1.1590.
