EUR/USD Price Forecast: A bullish comeback seems underway

• EUR/USD edges down to near 1.1455 as bulls take a breather ahead of flash German HICP data.
• The Fed decided to leave interest rates unchanged and warned of upside price risks.
• Investors will also focus on the flash German and the Eurozone Q2 GDP data.

The Euro (EUR) trades marginally lower to near 1.1455 against the US Dollar (USD) during the early European trading session on Thursday. The major currency pair corrects slightly after a strong recovery move in the last two trading days, with investors awaiting the German flash Harmonized Index of Consumer Prices (HICP) data for July.

According to estimates, the German headline HICP rises at a stronger pace of 2.8% Year-on-Year (YoY) against the previous reading of 2.4%. On a monthly basis, the headline HICP grows by 0.8% after declining by 0.2% in June.

Signs of hot inflationary pressures would boost European Central Bank (ECB) interest rate hike expectations. During the day, investors will also focus on the preliminary German and Eurozone Q2 Gross Domestic Product (GDP) data.

On Wednesday, the major currency pair gained strongly after the Federal Reserve’s (Fed) monetary policy announcement, in which it left interest rates steady in the range of 3.50%-3.75% for the fifth time in a row. Fed officials warned of upside inflation risks, and said that they are committed to bring it down.

EUR/USD technical analysis

EUR/USD trades marginally lower at around 1.1455 at press time. However, the near-term bias of the pair has improved as it looks sustainable above the 20-period exponential moving average (EMA), which is at 1.1422.

There is a Double Bottom formation on the daily chart, which reflects the arrival of bulls in the counter after a long period. Bullish hopes for the pair would strengthen once it decisively breaks above the marked hurdle at 1.1483.

The Relative Strength Index (14) shifts into the 40.00-60.00 range from the 20.00-40.00 zone, which indicates that the downside momentum has cooled off.

On the downside, immediate support is seen at the 20-period EMA at 1.1422, followed by the July 28 low at 1.1353. On the topside, the pair could extend the advance towards the June 12 low at 1.1557 once it crosses above the 1.1483 hurdle decisively.

(The technical analysis of this story was written with the help of an AI tool. Know more.)