The EUR/USD price has formed an inverted head and shoulders pattern after the relatively upbeat US retail sales numbers. The pair is trading at 1.2040, which is slightly below this week’s high of 1.2167.
EUR/USD news: The US statistics agency released relatively robust employment numbers yesterday. The data showed that the overall retail sales rose by 7.8% in January while the core retail sales rose by more than 5.9%. This performance was mostly due to the recently-passed $900 billion stimulus package.
Therefore, as Congress deliberates on the next package, there is a possibility that sales and inflation will keep rising. This will then push the Federal Reserve to raise interest rates in the near term. Looking ahead, the EUR/USD will react to the minutes of the ECB and the important building permits and housing starts data.
Turning to the four-hour chart, we see that the EUR/USD pair has formed an inverted cup and handle pattern. The head is at this week’s low of 1.1950 while the right shoulder is at 1.2050. The price is currently at the right shoulder section. The neckline is at 1.2190. Therefore, the pair may resume an upward trend in the next few days. If this happens, the next level to watch will be 1.2200.
However, a drop below this week’s low at 1.1950 will invalidate the H&S pattern. As such, it will open the possibility that the pair will move below 1.1900.
EURUSD technical chart