It looks like a big movement on the EURUSD is about to happen really soon. Will today’s CPI data be a great trigger for that? We’ll see. The reason we are looking forward for an increase in volatility is that the EURUSD is approaching the end of a rather boring sideways trend and traders need to eventually decide which way they want to go.
The sideways trend on the EURUSD has lasted since the second half of November and is shaped like an ascending triangle with a horizontal resistance at 1.137 (orange) and the rising dynamic support (red). A breakout of one of those two should bring us a proper mid-term trading signal. A breakout to the upside should give us a buy signal and a breakout to the downside should give us a sell signal.
In case of a breakout to the upside, there’s one additional resistance that we should be aware of. This resistance is a long-term down trendline (blue), which connects lower highs since May 2021. Only a breakout of that resistance will bring us a legitimate and powerful buy signal on the EURUSD, just crossing the 1,137 level may not be so significant.
The CPI data that we’ll find out really soon look like a potentially great fundamental trigger to start one of the movements described above. In this case, we don’t have to be so patient, the data will be published really soon.