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A speech by ECB head Lagarde and the release of the euro zone industrial production report might be worth watching if you’re trading this pair today.

Will EUR/USD follow-though on this break-and-retest setup?

Before everything else, let’s have a quick recap of the market movers in the past trading sessions:

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Upcoming Potential Catalysts on the Economic Calendar:

  • ECB Chairperson Lagarde to speak at Reuters event at 10:00 am GMT
  • Eurozone industrial production at 11:00 am GMT

What to Watch: EUR/USD

EUR/USD 1-hour Forex Chart
EUR/USD 1-hour Forex Chart

EUR/USD recently fell below its rising trend line support on the 1-hour chart, indicating that a reversal is in order.

Before that happens, price might need to retest the area of interest to gather more selling energy. The Fib retracement tool shows that this is around the 61.8% level or 1.2267.

Technical indicators confirm that bears could have the upper hand, as the moving averages showed a bearish crossover while Stochastic is indicating overbought conditions.

If sellers are eager to return, the 38.2% level might already be enough to keep gains in check as it lines up with the 100 SMA dynamic inflection point. A continuation of the slide could take EUR/USD back to the swing low at 1.2132 or even much lower.

Note that the dollar could stay supported after Fed officials shared a relatively upbeat outlook for the economy and monetary policy. At the same time, risk-off flows stemming from pandemic concerns might keep the safe-haven currency afloat.

ECB head Lagarde’s speech could be a catalyst for the shared currency, along with the release of the eurozone industrial production figures. In any case, stay on the lookout for additional EUR/USD volatility in the next few hours!