The fall of the eurozone economy into a deep recession negatively affected euro. As soon as doubts arose in the market about the possibility of the Fed easing interest rates, EUR/USD began to steadily decline. However, looking at the weekly chart, the pair remained trading within a broad sideways range.
Most likely, the pair will face significant pressure until the Fed starts lowering interest rates, or at least until labor market and inflation data indicate weakening. Riding this wave, euro will move towards the recent local peak reached in December last year.
The pair will rise today if the US retail sales data exceeds expectations.
Technical picture and trading idea:
The pair currently trades below the middle line of the Bollinger Bands, above SMA 5 and SMA 14. RSI fell below the 50% level and grew rather weakly. Meanwhile, the stochastic indicator entered the overbought area and seems to be shifting downwards.
Market players will see limited growth towards 1.0800 if the pair stays above the support level of 1.0730 and the retail sales data turn out to be worse than expected.