EUR/USD Looks Set for a Correction

The Euro (EUR) extended upside movement against the US Dollar (USD) on Friday, increasing the price of EURUSD to more than 1.1375 following some key economic releases. The technical bias remains bullish because of a Higher High in the ongoing wave.

Technical Analysis

As of this writing, the pair is being traded near 1.1377. A support may be noted near 1.1338, a major horizontal support ahead of 1.1300, the psychological number and then 1.1144, the swing low of the recent downside wave as demonstrated in the following daily chart.

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On the upside, the pair is likely to face a hurdle near 1.1412, the intraday high of yesterday ahead of 1.1450, the psychological number and then 1.1495, the high of October 2015. The technical bias will remain bullish as long as the 1.1144 support area is intact.

Eurozone Inflation

According to the preliminary Consumer Price Index reading for March, Eurozone remains in deflation territory at a negative 0.1 percent on an annualized basis, but an improvement from the -0.2 percent in February. Core CPI, which strips out volatile food and energy prices, showed a year-over-year growth rate of 1 percent, higher than the 0.8 percent in February. Both the headline and core CPI readings were in line with the average analyst expectation of -0.1 percent and 1 percent, respectively, according to Thomson Reuters.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term if we get a valid bearish reversal candle on the daily chart.

 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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