Overall, selling pressure reminds us that this exchange rate is in a technical downtrend, and any strength should be considered short-term. US dollar buyers should be ready to jump on these comfortable highs. Overall, we note that the EUR/USD price broke below the 1.0711 level on Friday, which constitutes the 61.8% Fibonacci retracement of the late 2023 and early 2024 high. Failure indicates that we are facing the 78.6% Fib line in the face again. The chart above shows this is where the recent sell-off found support and was followed by a bounce.It is possible that this level will be approached in the first half of trading this week if the important eurozone inflation figures come in weak. According to economic calendar data releases, German inflation figures are the initial focus with state-level releases starting in the European morning on Monday, with the final German release at 13:00 GMT (expected: 2.3% year-on-year, previous: 2.2%).The French CPI is scheduled to be released today, Tuesday, at 07:45 GMT (expected: 2.1%, previous: 2.3%). From the German and French figures, we can get a good guidance on where Eurozone data is headed. In the same regard, the consumer price index in the euro zone will be released at 10:00 GMT today, Tuesday, with the market expecting it to rise by 2.4% on an annual basis, unchanged in March. Core CPI is expected at 2.8%, down from 2.9%.Obviously, any underperformance would increase the chances of the ECB cutting rates again in July, after having already done so in June. The timing of the second ECB cut is what matters to markets, as the June move was well-flagged. But if inflation figures beat expectations, expect EUR/GBP and EUR/USD to rise, as markets will see a lower probability of a July rate cut.Indeed, a strong reading would raise questions about whether a cut in June was appropriate at all, which would support the euro. Moreover, it is the US end of the equation that tends to have a greater impact on the EUR/USD price, and there are some important events on the calendar.With market expectations for the Fed’s first-rate cut pushed back to December after last week’s hot consumer spending figures. Clearly, this week’s figures will determine whether a rate cut in 2024 is possible or whether we will have to wait until 2025.Therefore, the US Federal Reserve’s policy update on Wednesday will be the first major test for the US dollar, as investors will be interested in knowing whether the Fed is ready to validate market expectations regarding the first interest rate hike in December. Remember, the Fed’s latest forecasts showed policymakers expecting three rate cuts in 2023. Also, the Fed will have to admit that’s a little ambitious in the face of incoming data showing the economy is starting to generate heat again. EUR/USD Technical analysis and forecast:EUR/USD price remains in pullback mode as it tests the 50% Fibonacci retracement level on its downward swing seen on the 4-hour time frame. This is in line with the dynamic 100 SMA inflection point which increases its strength as resistance. Moreover, a higher pullback could still reach the 61.8% Fibonacci level near the 200 SMA and the downtrend line at 1.0778, which could be the dividing line for a downward correction.If any of these factors remain a ceiling, EURUSD could fall to lows of 1.0609 or lower. Technical indicators mostly point to a continuation of the decline. Technically, the 100 SMA is below the 200 SMA to confirm that the overall trend remains bearish or that selling is likely to gain momentum. Furthermore, the gap between the indicators widens to reflect the strength of selling pressure as well. Also, Stochastic is moving lower to show that the bears are in control, and that the oscillator has room to slide before it reverses oversold conditions. Utterly, the RSI appears to be moving lower without reaching the overbought zone, indicating that sellers are keen to take control.More By This Author:EUR/USD Analysis: Rangebound Trading Ahead Of Key EventsUSD/JPY Analysis: Yen Slumps To 34-Year LowGBP/USD Analysis: Focus Shifts Cautiously To US Data

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