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EUR/USD retreats from 1.0950 amid caution ahead of US labor market data.
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The Eurozone HICP data is seen higher due to base effects.
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Eurozone bulls may find interest after further correction to near 1.0880.
The EUR/USD pair resumed its downward journey after a less confident pullback near 1.0950 early in the European session. Major currency pairs face selling pressure as market sentiment sours ahead of US labor market data.
S&P500 futures remained subdued in the Asian session, reflecting caution among market participants ahead of key economic data.
The US Dollar Index (DXY) edged closer to 102.60 as the prospect of an interest rate cut from the Federal Reserve (Fed) in March receded. Market participants are reconsidering rate cut expectations given the strong economic prospects of the US economy.
On the Eurozone front, investors await preliminary Harmonized Index of Consumer Prices (HICP) data for December, due out at 10:00 GMT. Inflation data is seen higher due to the base effect as it will give European Central Bank (ECB) policymakers the chance to favor higher interest rates for longer.
EUR/USD trades in a rising channel chart pattern on a four-hour scale where each pullback is considered a selling opportunity by market participants. The asset is declining towards the bottom of the above chart pattern. The major corrected near the 200-period exponential moving average (EMA), which trades around 1.0913.
The Relative Strength Index (RSI) (14) has dropped to the bearish range of 20.00-40.00. A recovery move is highly likely as broad appeal is optimistic and a low RSI (14) would be considered 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
EUR/USD
