EUR/USD Price Analysis: Inventory distribution stretches ahead of Fed policy

• The formation of inventory distribution involves the initiation of longs by the market participants.
• Overlapping of 20- and 50 EMAs to the price dictates a consolidation ahead.
• A volatility expansion after a squeeze will result in volumes and wide-range ticks.

The EUR/USD pair is looking for a cushion around 1.0180 after a steep correction in the early Tokyo session. On Friday, the asset witnessed a steep fall after sensing exhaustion while sustaining above 1.0250, which dragged the major swiftly.

An inventory distribution formation after a juggernaut rally has stretched further on an hourly scale. This generally indicates the unavailability of a potential trigger, which can deliver a firmer move, most probably on the upside. The inventory distribution has formed in a range of 1.0131-1.0282 range.

It is worth noting that the 20- and 50-period Exponential Moving Averages (EMAs) around 1.0200 are overlapping with the asset price, which signals a consolidation ahead.

Also, the Relative Strength Index (RSI) (14) is oscillating in the 40.00-60.00 range, which signals a volatility contraction but is followed by a breakout in the same.

A breach of Thursday’s high at 1.0278 will drive the asset towards the round-level resistance at 1.0300, followed by July 1 low at 1.0366.

Alternatively, the greenback bulls could gain control if the asset drops below Monday’s low at 1.0081.  An occurrence of the same will drag the asset towards the psychological support at 1.0000. A breach of the psychological support will expose the greenback bulls to recapture its two-year low at 0.9952.

EUR/USD hourly chart