Who’s thinking of trading the U.S. CPI release this week?
Here’s a simple EUR/USD consolidation setup to keep on your radar.
As you can see from the hourly chart below, the pair formed lower highs and found support around the 1.0945 level to create a descending triangle.
EUR/USD 1-hour Forex Chart by TV
Price just bounced off the triangle support near S1 (1.0930) and is now setting its sights back on the resistance close to the pivot point (1.0990) and 1.1000 major psychological handle.
Is the ceiling likely to hold?
Technical indicators are suggesting so, as the 100 SMA is below the 200 SMA while Stochastic looks ready to head down from the overbought region, reflecting the presence of bearish vibes.
If that’s the case, EUR/USD just might slip back to the bottom of the triangle again or perhaps attempt a bearish breakdown to S2 (1.0860).
On the other hand, a move past the triangle top could set off a climb to the next upside barriers at R1 (1.1070) or even R2 (1.1120).
There are no major catalysts in the upcoming trading sessions, so there’s a good chance this pair could stay in consolidation ahead of the U.S. CPI release on Thursday.
Number crunchers are projecting a slight pickup in the annual CPI reading from 3.0% to 3.3% which just might be enough to revive Fed tightening bets once more. If that’s the case, the Greenback could recoup its post-NFP losses while also banking on risk-off flows.
Meanwhile, there are no major reports due from the eurozone, so the shared currency could be a viable counter currency when trading U.S. news releases. Don’t forget that the ECB just shifted to a less hawkish stance recently, too!
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