EUR/USD Price Forecast: Correcting lower with the near-term bullish trend intact

The Euro (EUR) remains practically flat against the US Dollar (USD) on Thursday, with the weekly chart showing a mild bearish correction, as the rally from late July lows had reached overbought levels. The EUR/USD has pulled back to the 1.1650 area from last week’s highs past 1.1700 but maintains the near-term bullish structure intact.

On the macroeconomic front, German data has been fairly supportive this week. The GfK Consumer Sentiment Index, released earlier on Thursday, revealed that German Consumers are more optimistic about their income and also about the economic context in general. Dollar crosses, however, are trading within previous ranges with traders wary of placing large USD directional bets, awaiting Federal Reserve (Fed) Chairman Warsh’s speech at Jackson Hole on Friday, for some more clarity about the bank’s monetary policy plans. 

Technical Analysis: Euro remains positive while above 1.1620

EUR/USD bulls have failed to find acceptance above the late May highs at 1.1685, and the pair has been going through a mild bearish correction this week. The near-term bias is positive as spot remains above previous resistance at 1.1620 with momentum indicators still within bullish territory. The daily Relative Strength Index (14) is above 65, while the Moving Average Convergence Divergence (MACD) indicator remains in modest positive values, together suggesting constructive momentum as the Euro extends its recovery from the mid-1.14s.

Initial support is seen at the mentioned horizontal level around 1.1620 (June 16, August 17 highs). Further down, the August 18 and 19 lows near 1.1570 might provide some support ahead of the early August lows, right above 1.1500.

On the topside, the confluence of the May 29 high, at 1.1685, and the 78.2% Fibonacci retracement of the May-June selloff, at 1.1692, might prove a tough nut to crack on the way to the early May highs near 1.1790.