EUR/USD Price Analysis: Consolidation continues inside 50% and 61.8% Fibo retracements

• EUR/USD is displaying volatility contraction on a broader note, which will result in wider ticks and heavy volume after expansion.
• The RSI (14) has slipped into the bearish range again amid an absence of strength in the recovery move by the Euro.
• Going forward, the release of the German Inflation data will be of utmost importance.

The EUR/USD pair has delivered an upside break of the extremely narrow range consolidation placed in a 1.0710-1.0716 zone in the Asian session. The major currency pair has rebounded as the risk appetite of the market participants is improving gradually amid a sheer decline in the US Treasury yields. The return generated on 10-year US Treasury bonds dropped to 3.60%.

S&P500 futures have attempted a recovery move as investors have started digesting recession fears in the United States amid expectations of further interest rate hikes by the Federal Reserve (Fed). For further guidance, investors will keep an eye on the German inflation data.

EUR/USD is demonstrating signs of volatility contraction post commentary from Fed chair Jerome Powell on the interest rate guidance. The shared currency pair is oscillating between the 50% and 61.8% Fibonacci retracements (placed from January 6 low at 1.0483 to February 1 high at 1.1033) at 1.0760 and 1.0694 respectively.

The 20-period Exponential Moving Average (EMA) at 1.0732 is acting as a major barricade for the Euro.

Meanwhile, the Relative Strength Index (RSI) (14) is looking to drift back into the bearish range of 20.00-40.00, indicating an absence of strength in the Euro.

Going forward, a break above Tuesday’s high at 1.0766 will drive the asset toward the round-level resistance at 1.0800 followed by 38.2% Fibo retracement at 1.0823.

On the flip side, a break below Tuesday’s low at 1.0669 will drag the major currency pair toward January 4 high at 1.0635 and December 22 low at 1.0573.

EUR/USD two-hour chart