- EUR/USD retreats from 1.0950 amid caution ahead of US labor market data.
- The Eurozone HICP data is seen higher due to base effects.
- Eurozone bulls may find interest after further correction to near 1.0880.
The EUR/USD pair resumes its downside journey after a less-confident pullback to near 1.0950 in the early European session. The major currency pair faces selling pressure as the market mood has turned downbeat ahead of the United States labor market data.
S&P500 futures remain subdued in the Asian session, portraying caution among market participants ahead of crucial economic data.
The US Dollar Index (DXY) has rebounded to near 102.60 as prospects of interest rate reduction from the Federal Reserve (Fed) in March have dropped. Market participants are reconsidering expectations of rate cuts considering strong economic prospects of the US economy.
On the Eurozone front, investors await the preliminary Harmonized Index of Consumer Prices (HICP) data for December, which will be published at 10:00 GMT. The inflation data is seen higher due to base effects as it will allow European Central Bank (ECB) policymakers to favour higher interest rates for a longer period.
EUR/USD trades in a Rising Channel chart pattern on a four-hour scale in which each pullback is considered as a selling opportunity by the market participants. The asset is declining towards the lower portion of the aforementioned chart pattern. The major has corrected to near the 200-period Exponential Moving Average (EMA), which trades around 1.0913.
The Relative Strength Index (RSI) (14) has slipped into the bearish range of 20.00-40.00. A recovery move is highly likely as the broader appeal is upbeat and lower RSI (14) would be considered as oversold.
Fresh buying opportunity would emerge if the asset will correct further to the lower portion of Rising Channel around 1.0878. This would drive the asset towards December 20 low at 1.0930, followed by January 4 high at 1.0972.
On the flip side, downside would appear if the asset will drop below November 17 low at 1.0825. If the asset drops below the same, it will drop further to September 12 high at 1.0770 and December 8 low at 1.0728.
EUR/USD four-hour chart
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