The EURUSD pair fell sharply after the 40-year high CPI inflation print from the US economy last week, setting the stage for a big buy the dip scenario for the EURUSD pair.
This week’s release of the FOMC meeting minutes could provide such an opportunity, with dip-buyers likely lurking around the 1.1350 to 1.1330 if a negative shock occurs.
Personally, I think buying the dip in the EURUSD pair makes a lot of sense with the US dollar index in retreat, and expectations for the ECB to act next month increasing.
I also think that the market has fully priced in a 0.25 percent rate hike from the Federal Reserve in March, but they have not priced in a 0.50 rate increase from the FED.
This is the main risk for the euro currency now, meaning that a deep negative price shock could occur, which may turbo charge the US dollar if the FED go all in and hike rates by 0.50 percent.
Currently, lower and time frame analysis is providing a compelling case for buying the dip in the EURUSD pair around the 1.1330 level. This is the key price zone to watch this week.
According to the ActivTrader market sentiment tool 52 percent of traders have turned bullish towards this pair, with the sentiment dropping sharply from last week.
This usually means that a trend pauses, and range bound trading approaching. So, with this I think its important to note that until retail turns bullish, this pullback could have legs.
EURUSD Short-Term Technical Analysis
The four-hour time frame shows that the EURUSD pair has briefly broken above the neckline of a large, inverted head and shoulders pattern, located around the 1.1470 area, and then pulled back.
If we see a move above the 1.1330 level this week then the EURUSD pair could be a great buy according to the Ichimoku indicator. Much above the 1.1470 and the EURUSD pair is going to breakout sharply.
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EURUSD Medium-Term Technical Analysis
Looking at the daily time frame and the EURUSD pair is at a critical juncture and has moved back above a critical trendline on the daily time frame.
In the near-term, this looks to be setting up for a test of the mentioned trendline. If we see a strong bounce from the trendline then expect a breakout above 1.1500.
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