EUR/USD Forex Signal: Double-Top Pattern Points To A Brief Reversal

Bearish view

Bullish view

The EUR/USD was flat on Monday and Tuesday morning as traders continued reflecting on last week’s US and European economic numbers and their implications on the Federal Reserve and the ECB. It was trading at 1.0865, where it has been at in the past few days.
 Fed and ECB speakers aheadThe EUR/USD pair jumped last week after the mixed economic numbers from the US and the Eurozone. On the positive side, data showed that the US inflation dropped slightly in April, with the annual headline and core CPI figures falling to 3.4% and 3.6%, respectively.Meanwhile, retail sales remained flat in April and the March figure was revised downwards to 0.6%. The manufacturing and industrial production, housing starts, and building permits figures were weaker than expected.Therefore, these numbers implied that the Federal Reserve may start to cut interest rates later this year in a bid to supercharge the economy. The CME Fed Rate Monitor Tool points to about two cuts this year.Still, Fed officials have pushed back against rate cut expectations. Raphael Bostic and Loretta Mester said that the bank will continue watching incoming data to determine when to start cutting rates. Fed’s Christopher Waller and John Williams will be the two Fed officials to watch on Tuesday.Meanwhile, European data showed that inflation stabilized at 2.4% in April, an improvement from last year’s 7.0%. The figure is slowly moving to the ECB’s target of 2.0%, raising the possibility that the bank will start slashing rates in June.Christine Lagarde, the bank’s governor, will provide more information about this in a speech on Tuesday morning. Her statement will likely have some impact on the EUR/USD pair.
 EUR/USD forecastThe EUR/USD pair has been in a strong bull run after bottoming at 1.0600 in April. It rallied and reached a high of 1.0895 last week, its highest swing since March 21st. The pair has moved above the 61.8% Fibonacci Retracement level and is being supported by the 50-period Exponential Moving Averages (EMA).However, it seems to be forming a small double-top pattern at 1.0895 and whose neckline is at the 61.8% retracement point at 1.0836. Therefore, with no major economic numbers expected this week, there is a possibility that the pair will retreat as some traders start to take profits.The initial level to watch will be 1.0836 followed by the 50% retracement point at 1.0790. On the flip side, a move above the double-top point at 1.0895 will point to more upside.More By This Author:Platinum Price Analysis: Bearish Engulfing Pattern Forms
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