EUR/USD will have to extend gains in the near term to solidify chances of the rally extending – Scotiabank

EUR/USD probes technical resistance at 1.0725 ahead of US CPI data. Economists at Scotiabank analyze the pair’s outlook.

Short-term price action looks constructive for the Euro

Short-term price action looks constructive for the EUR but spot will have to extend gains in the near term to solidify chances of the rally extending.

Firm support last week around 1.0660 has set up a minor double bottom on the intraday chart, with the EUR flirting with the bull trigger at 1.0725. From a non-technical point of view, the USD’s reaction to the CPI data will likely dictate whether this pattern has any traction or not.

A break higher should push EUR/USD on to new, short-term highs around 1.08. Failure, on the other hand, likely means a return to the upper 1.06s.

Bullish trend momentum signals lean in favour of more EUR gains.