EUR/USD could break out in either direction

EUR/USD has extended its sideways grind into a third straight day. As FXStreet’s Eren Sengezer notes, the pair has the potential to move sharply in either direction.

Breakout imminent on US inflation data

“The symmetrical triangle that seems to have formed on the four-hour chart confirms the view that the pair is about to break out of its range. 

“On the upside, 1.0230/1.0240 (Fibonacci 38.2% retracement of the latest downtrend, 200-period SMA on the four-hour chart) aligns as key resistance. With a weak CPI print, the pair could rise above that level and target 1.0300 (psychological level, Fibonacci 50% retracement) and 1.0370 (Fibonacci 61.8% retracement.” 

“Significant support is located at 1.0200 (psychological level, 100-period SMA, 50-period SMA). If the dollar regathers strength on a hot inflation report, the pair could pierce through that support and extend its decline toward 1.0150 (Fibonacci 23.6% retracement) and 1.0100 (psychological level, static level).” 

See – US CPI Preview: Forecasts from nine major banks, soaring inflation to ease off in July