EUR/USD: Consolidation Remains Intact

Frankfurt (June 14)  EUR/USD continues to hold in a narrow trading range within the boundaries of last Friday’s session. At present, the pair is off the high of the day, currently trading at 1.1206, a minor 0.02% loss from Tuesday’s North American close.

The pair has traded with a downside bias since the release of German CPI, which was reported at 02:00 ET. While a high for the session was initially established at 1.2256 upon the release of the data, which came in as expected, sellers stepped in at 1.2256 and are currently driving the pair lower.

German CPI came in at -0.2% month-over-month for May and 1.5% year-over-year, both meeting forecasts. Also reported today’s trading was eurozone industrial production, which came in as expected at 0.5% month-over-month for April.

Overall, the bias in EUR/USD remains to the upside, despite the current narrow trading range.

Volatility has the potential to increase, however, given the release of US CPI and retail sales data at 08:30 ET. This will be followed by the FOMC rate decision at 14:00 ET. Fed Chair Yellen will hold a press conference after the rate decision at 14:30 ET. Although a 25bps hike is expected, traders will be focused on guidance for the remainder of 2017.

At present, the target for EUR/USD is at 1.1650, which is based on the breakout from the bull flag formation which took place at the end of May. The recent ability to hold above the upper boundary of the pattern, shown on the daily chart, keeps the formation, and its upside target, at 1.1650, intact.

On the upside, however, first resistance for EUR/USD stands at 1.1300, the level which has provided a ceiling for the pair thus far in the month of June. An eventual break above 1.1300 has the potential to bring in more buyers, as such a move would also result in a break above the November 9, 2016 spike high.

Source: EconomicCalendar