Forex FOREX PRO WEEKLY, June 14 - 18, 2021

Sive Morten

Special Consultant to the FPA

No doubts the major events of this week were ECB statement and CPI report, but it is even more important market ignorance of good inflation data before Fed meeting on coming week. you will be surprised when you see Core CPI chart later in report that indicates inflation level right now...

Market overview

First is back view on recent NFP report from Fathom consulting. Last week Fathom has released the report where they suggest spike in inflation till the end of the year, while in this new note they report on economy recovering, which stands totally in a row with our long-term view as well:

US nonfarm payrolls increased by 559K in May. While this was below consensus expectations of a 650K gain, it represented a strong increase after a disappointing rise of 278K in April. Overall job gains were driven by increases of 292K in leisure and hospitality, 87K in education and health services and 67K in government. The unemployment rate is now at 5.8%, the lowest since March 2020, but still well above the pre-pandemic rate of 3.5%, and the employment-to-population ratio is around 3 percentage points lower. All in all, the May numbers represent a welcome improvement, although they are unlikely to lead to an imminent shift in Fed policy. Nevertheless, with the recovery likely to remain robust over coming quarters, further labour market improvements alongside elevated inflation are likely to fuel increased calls by Fed officials for the beginning of discussions on the potential for a future tapering of asset purchases.


The currency market volatility on Tuesday hit the lowest level in more than a year, as investors sat on the sidelines waiting for clearer signals on inflation levels and central bank policies around the world.

With inflation updates from China, Europe and the United States this week and an European Central Bank meeting to be followed by a U.S. Federal Reserve meeting next week, currency investors appeared to be treading water. Range-bound currency markets meant a fall in volatility. The Deutsche Bank Currency Volatility Index hit its lowest level since February 2020.

"All the major currencies are having muted reaction right now as they wait," said JB Mackenzie, managing director of futures and forex at TD Ameritrade. "We're looking at the inflation numbers to see how the economies are running. Are they very hot and, if so, does that mean there could be a reaction from central banks globally?"

The dollar index was down slightly on Thursday in a choppy session in which it alternated between losses and gains as investors digested elevated U.S. inflation data and commentary from the European Central Bank.

After adopting a wait-and-see attitude all week, sucking volatility from the market and leaving major currencies mostly range-bound Thursday's news appeared to add little new direction to currency markets.

The European Central Bank raised its growth and inflation views but promised to keep ample stimulus flowing, fearing that a retreat now would accelerate a worrisome rise in borrowing costs and choke off recovery.

Already buying up most of the new debt issued by euro zone governments, the ECB said it would buy bonds at a "significantly higher" pace than during the early months of the year, reaffirming its pledge from March as most ECB watchers had expected.

"We believe that the steady hand is actually the right response," ECB President Christine Lagarde told a news conference, stressing that tapering, exiting or transitioning away from the 1.85 trillion euro Pandemic Emergency Purchase Programme had not even been discussed.

Yet sources told Reuters three of the 25 members of the Governing Council wanted to reduce the pace of PEPP at the meeting, citing a better outlook for growth and inflation. Lagarde acknowledged some debate around the decision but said there was broad majority support for "significantly higher" bond buys.

The 19-country euro zone has relied on copious ECB money printing to finance ballooning government deficits, leaving it especially vulnerable to any curbing of stimulus. The ECB has bought around 80 billion euros worth of debt per month under its Pandemic Emergency Purchase Programme (PEPP) this quarter, up from around 62 billion euros in the first quarter.

Thursday's decision still gives policymakers some leeway to adjust bond buys, particularly during the summer months when liquidity tends to fall.

"We expect the situation to look different at the next joint assessment of financing conditions and the inflation outlook in September, when vaccinations will be close to the 70% inoculation target and the recovery fund will be operational," Morgan Stanley said. At that point we expect a reduction in purchases. Maintaining its long-standing guidance, the ECB also said PEPP would last until March 2022 and that it reserved the right to buy less than its purchase quota or increase it as needed to "maintain favourable financing conditions".

The ECB raised most of its growth and inflation projections and declared risks to the outlook balanced, giving up long-standing guidance for downside risks. It now sees 2021 growth at 4.6%, above the 4% projected in March, while next year's forecast was lifted to 4.7% from 4.1%.

Inflation projections were also raised for the next several years and the ECB now sees price growth at 1.9% this year, in line with its target and above its last projection for 1.2%. But the seemingly strong data mask weak underlying trends and mostly reflect a bounce back from the deepest recession in living memory.
Underlying inflation remains low and overall inflation is expected to decline for the next several years, staying below the ECB's target at least through 2023.

"We are far away from our ultimate aim. We are certainly not where we would like to be once the pandemic is over," Lagarde said.

Europe is also far behind the United States in its recovery and on vaccinations, so that any withdrawal of support ahead of the U.S. Federal Reserve would be seen as a danger.

U.S. consumer prices rose solidly in May, leading to the biggest annual increase in nearly 13 years as a reopening economy boosted demand for travel-related services, while a global semiconductor shortage drove up prices for used motor vehicles. T

he pandemic's easing grip on the economy was also underscored by other data from the Labor Department on Thursday showing the number of Americans filing new claims for unemployment benefits fell last week to the lowest level in nearly 15 months.

May's inflation drivers appear to be temporary, fitting in with Federal Reserve Chair Jerome Powell's repeated assertion that higher inflation will be transitory.

"Parts of the economy contributing the most to inflation in April and May are going through understandable short-term adjustments or merely reflating back to 'normal' levels," said Chris Low, chief economist at FHN Financial in New York. "Areas not impacted by the pandemic are moderating the CPI rise. But this report confirms demand is exceeding supply."

The consumer price index increased 0.6% last month after surging 0.8% in April, which was the largest gain since June 2009. Food prices rose 0.4%, but gasoline declined for a second straight month. In the 12 months through May, the CPI accelerated 5.0%. That was the biggest year-on-year increase since August 2008 and followed a 4.2% rise in April.

The jump partly reflected the dropping of last spring's weak readings from the calculation. May was probably the peak in the CPI, with these so-called base effects expected to level off in June. Economists polled by Reuters had forecast the CPI rising 0.4% in May and vaulting 4.7% year-on-year. Excluding the volatile food and energy components, the CPI increased 0.7% after soaring 0.9% in April.

The core CPI shot up 3.8% in the 12 months through May, the largest increase since June 1992. The Fed has signaled it could tolerate higher inflation for some time to offset years in which inflation was lodged below its 2% target, a flexible average. The U.S. central bank's preferred inflation measure, the personal consumption expenditures price index, excluding the volatile food and energy components, rose 3.1% in April, the biggest gain since July 1992.

“Figures like today’s CPI will certainly be raising eyebrows at the Fed, but the bottom line is they will likely need additional evidence to determine whether upward inflation pressures will be more persistent,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

In another report on Thursday, the Labor Department said initial claims for state unemployment benefits fell 9,000 to a seasonally adjusted 376,000 for the week ended June 5. Claims have decreased for six straight weeks. The drop in applications was led by California and Pennsylvania. Though layoffs are subsiding, claims remain well above the 200,000 to 250,000 range that is viewed as consistent with a healthy labor market.

"You have this tug between the two currencies and it's creating a back and forth. That's why you're seeing a little bit of a cap in terms of dollar weakness and euro strength," said Minh Trang, Senior FX Trader at Silicon Valley Bank. The overall trend has been a bit of dollar weakness not just because of the robust growth in the U.S. there's been robust growth over all. A lot of economies have been recovering," he said. "When you have optimism in overall global growth typically that creates a risk on mentality that's going to favor other currencies over the dollar. People are digesting what the next move may be. The data today didn't give enough lift to commit to one side or the other," said Trang.

After a week of anxious waiting, markets got the high U.S. inflation number they dreaded, then shrugged it off and moved on - leaving the U.S. dollar under pressure and most majors stuck in ranges.

"What we're seeing is a market that believes in the Fed," said Chris Weston, head of research at broker Pepperstone in Melbourne, as investors temper worries that the strong recovery in the United States prompts early rate hikes. "We're going to get tapering," he said. "But it's going to get done a such a snail's pace."

"It basically fit the Fed script, that we'd get a burst but it's going to be temporary," said Westpac currency analyst Imre Speizer. "This report is consistent with that, it doesn't argue against it. I think the market needed something that argued against it to push the U.S. dollar higher."

Focus now turns to the Fed's meeting next week, although traders now say that there may not be much of a shift in rhetoric which has played down the need to taper stimulus. A plan for reducing bond buying is expected to be announced in August or September a Reuters poll of economists found, but it isn't forecast to begin until next year.

The Federal Reserve is likely to announce in August or September a strategy for reducing its massive bond buying program, but won’t start cutting monthly purchases until early next year, a Reuters poll of economists found.

A significant number of Fed watchers also said the central bank would wait until later in the year before announcing a taper, now the main focus for markets fretting over rising inflation as an end to the pandemic in the United States is in sight.

Booming demand with the U.S. economy reopening is expected to continue and push up consumer prices this year, with the June 4-10 Reuters poll of over 100 economists showing an upgrade to both growth and inflation forecasts.


Nearly 60% of economists, or 29 of 50, who responded to an additional question said a much-anticipated taper announcement from the central bank will come next quarter, despite a patchy recovery in the job market in recent months.

"We expect to hear clear hints at the Jackson Hole Conference that the Fed is now discussing the merits of QE tapering and this will be developed further at the September FOMC which is just four weeks later," said James Knightley, chief international economist at ING. At that point we suspect the Fed will indicate the market should be braced for a formal QE taper announcement with outlined path forward at the December FOMC."

Nearly 60% of economists, or 26 of 45, said the reductions would start in the first quarter of next year. Among those who ventured a guess by how much monthly bond purchases would be reduced gave a median forecast of $20 billion. The Fed is currently purchasing $80 billion a month in Treasuries and $40 billion in MBS.

Driven by massive government spending and a rapid inoculation drive, the U.S. economy was expected to grow at a seasonally adjusted annualized rate of 10.0%, 7.0% and 5.0% in the current, next and the fourth quarter, respectively. That compared to 9.5%, 6.7% and 4.7%, respectively, forecast in the previous poll.

"The U.S. is on track to have recovered all its lost output in the current quarter and end the year with a larger economy than if there had been no pandemic and growth had merely continued at its 2014-19 trend," added ING's Knightley.

The U.S. unemployment rate was forecast to gradually fall through to the end of next year, averaging over 5% this year and more than 4% in 2022. That is still above its pre-crisis level of 3.5%.


"While a lot of what we are seeing now is indeed transitory, structural changes are taking place in the global economy and domestic fiscal policy that could lead to more sustained high inflation," said Philip Marey, senior U.S. strategist at Rabobank.

Over 60% of economists, or 23 of 38, said higher inflation was the biggest risk to the U.S. economy, compared to just six penciling in high unemployment. And about two-thirds said they were concerned about rising U.S. inflation.

"You get the message, in large font: the peppy rollout of stimulus and vaccines is causing U.S. demand to rebound much faster than supply," said Sal Guatieri, senior economist at BMO Capital Markets. This is creating many unpleasant side-effects, like inflation...just a few quarters after the economy's collapse instead of the usual several years for imbalances to emerge after a recession. The writing is on the wall: The Fed's temporary-inflation mantra is sounding more dated by the week."

The dollar index edged down on Friday and major currency pairs were stuck within recent ranges as markets shrugged off Thursday’s high U.S. inflation number, believing the Federal Reserve’s stance that it is likely to be a temporary blip.

We agree with the Fed that elevated inflation pressures will prove short-lived,” UBS strategists said in a note to clients. “Both Federal Reserve and European Central Bank policymakers have been unusually consistent in stressing that policy will only need to be tightened if inflation becomes more sustained—which they currently view as unlikely.”

A gauge of euro-dollar implied volatility over a six-month horizon was at its lowest since early March 2020, almost back to the levels it was at before the COVID-19 pandemic caused volatility to spike.

“This glut of liquidity is driving volatility levels lower across asset classes and driving the search for carry, including at the long end of yield curves,” wrote ING strategists in a note. In currency trading, “carry” refers to gains from holding higher-yielding currencies. This environment should continue to see the dollar gently offered against those currencies with good stories (monetary tightening or commodity exposure) and a little carry,” ING said.

The euro and sterling dipped against the dollar on Friday as investors bet interest rates would stay lower for longer in Europe and Britain while looking ahead to next week’s U.S. monetary policy meeting.

A day after the European Central Bank stuck to its dovish stance, ECB policymaker Klaas Knot said that flexible fiscal rules would be needed for years as monetary policy remains constrained.

“ECB policy makers are indicating that inflation rates are way below levels that are needed to put upward pressure on rates,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto. That’s cutting away at the euro’s recent rally, putting some downward pressure on it. The biggest contributor to the move we’ve seen overnight is the (euro) weakness as opposed to idiosyncratic dollar positive forces. The dollar’s winning the reverse beauty contest,” Schamotta added.

Traders were still preparing for volatility around the Federal Open Market Committee meeting scheduled for the week ahead, according to Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets.

If you’re starting from a position where you’re already short dollars, since FOMC meetings often have a lot of volatility, you might reduce your short for risk management purposes,” Anderson said.

Strong inflation numbers aside, recent data has offered snapshots of an economy that is strengthening but does not appear to be close to overheating. Employment, for instance, remains about 7.6 million jobs below its February 2020 peak while the latest monthly report fell short of economists estimates.

Analysts at BofA Global Research on Friday outlined a number of reasons that inflation may be more sustained than many expect, including second-tier indicators such as the National Federation of Independent Businesses survey of small businesses showing price pressures are filtering to customers.

“The list of excuses for transitory inflation is getting long. The risk of higher, more persistent inflation is growing,” BofA’s analysts wrote.

COT Report

This week guys report shows position closing with light drop in bullish sentiment which mostly reflects market's preparation to ECB meeting and CPI report. This week, we probably could see the same dynamic as now it is preparation to Fed meeting which is promised to be even more active.


Next week to watch


Markets will listen closely to what the Federal Reserve will have to say on inflation at the end of their two day meeting on Wednesday, amid concerns that trillions in fiscal stimulus will fuel a rise in consumer prices.

After years of very low inflation, a range of metrics, including the Fed’s preferred core personal consumption expenditures (PCE) price index, are on the rise. The PCE rose 3.8% in the 12-months to May, its largest jump in three decades.

The Fed insists consumer price gains will be temporary and that it has the tools to combat an inflationary surge. Signs that policy makers may be digging in for a more sustained rise in consumer prices could spark fears of a sooner-than-expected unwind of easy money policies, and hurt stocks.

-ANALYSIS-Job-inflation tradeoff, exiled from Fed policy, could mean a hot summer


Is the newly-hawkish Reserve Bank of New Zealand about to get its first-quarter growth forecast beaten? Kiwi GDP lands on Thursday, and the central bank thinks it’s going to be negative, putting the country back in technical recession.

Partial indicators, however, say it may not be so. While the absence of foreign tourists will be keenly felt, domestic consumption has been robust and commodity prices - especially milk and lumber - have shifted favourably.

A beat may not mean sustainable strength, but a headline surprise would suggest an economy on firmer footing than the RBNZ appreciates, adding pressure to normalise policy even faster than the aggressive schedule flagged last month.


To be continued in the next post...

Sive Morten

Special Consultant to the FPA
This week guys Reuters give a "real gift" to us, providing big whales opinion on Fed policy, which is usually very near the spot. And it generates a lot of things to think about and how it could impact on existing trends on FX market. First is, the major thing that we see is consistency - big whales' view is consistent with our own one. For the months we talk about coming global economy and US cycle reversal, starting of growth stage that usually accompanied by US dollar and interest rates bullish trends for few years.

Now the most interesting thing is when the active stage of tapering starts and when Fed turns to the road of policy tightening. Reuters Poll suggests that on September meeting Fed gives the hint on preparation to tapering, while in December they announce formal start to this programme. This will be the transitionary period to coming cycle of higher interest rates. Tapering could last for 12-18 months before rate will be changed for the first time, somewhere in 2023. There is the risk however exists that it might be indeed temporal spike in inflation that will normalize later, as J. Yellen has suggested and as some banks believe (see UBS comments above). But, IMO, it is too wide number of statistics that confirms stable growth. It doesn't look like temporal or occasional. It is more probable that data could show some temporal correction and decreasing (as it is suggested seasonally for CPI in June). My logic is simple here. If we suggest that inflation is triggered by overdemand from population to goods and services due high level of personal savings that have not been spent during pandemic - why demand should drop when people will keep spending and additionally go to work with 2 times greater minimum hourly earnings and big stimulus government programmes that are still lasting?

Speaking on EUR - it is bad surprise from ECB as its statement was even more dovish than it could be. I'm afraid that this could put the shadow on our long-term EUR/USD view, where we suggest reaching of 1.25-1.28 level before major downside reversal. Still, as we have around 6 month before evident Fed policy changes and some relief in US statistics could happen in summer - maybe situation is not as dramatic and as EUR as DXY are able to complete long-term targets. Still, I wouldn't consider EUR investments for long-term anyway. Traders will try to take "carry-trade" positions in advance, while Dollar stands cheap, hunting for not only higher interest rates investments in long-term but trying to make money on rate appreciation as well. This could make advanced pressure on EUR/USD. EUR long-term positions have become weaker this week.

Finally I would like to remind you the chart from previous report, where you could see rising bullish divergence between US dollar positions and DXY level. This is fundamental long-term divergence and it is forming usually before big shifts in long-term trends. If you take a look at net position chart and EUR/USD rate you'll see that divergence always formed before major reversal:



We do not see radical changes on long-term charts by far. But Friday's drop was rare case when action was depending on EUR weakness rather than US Dollar strength. With big gap in ECB statement and expectations on Fed policy in perspective of 6-12 months, EUR/USD now stands at the fragile way. Hopefully events will let to complete technical targets to make technical picture correct, reflecting major ongoing fundamental processes.

It means that EUR still keeps bullish long term trend. MACD stands bullish. Taking the parallel view on Dollar Index - EUR has corresponding upside AB-CD with 1.2860 OP, standing near Yearly Pivot Resistance of 1.26. If our suggestion is correct - 1.26-1.28 is an area that corresponds to DXY 87.40 target. Vital area for monthly bullish setup is 1.16 lows that we've discussed earlier.

Jut theoretically for now, and talking about very long-term perspective, if EUR fails to break "B" point top - we can't exclude chances to see huge downside butterfly with left wing is already in place and target far below the parity, that in general agrees with big term gap of Central Bank policies (ECB plans no action until 2023, while Fed should act earlier)...



As we've said last week:
This chart reflects all information that we have by this moment. First is, trend stands bullish and market is forming triangle consolidation after monthly COP and just under strong 1.25-1.26 resistance area. Market is not at overbought. Although we have some hopes that ECB supports EUR appreciation but for the truth sake, this is optimistic scenario that EUR shows direct upward breakout. More probable that ECB also will be "betwix and between", that could trigger some downside action as investors' hopes will be missed. So, some deeper retracement inside the triangle could happen.

Now this suggestion stands underway, but in general this chart represents positive scenario. Negative scenario happens, if triangle will be broken down. Although last week we said that "it is less probable" but this week, its probability has become higher.

Still, if everything to be going well probable scenario suggests appearing of butterfly pattern that should let as dollar index as EUR to hit major targets before major reversal. The major question for us is where the right wing's bottom will be formed. Currently I choose the level of previous top but any level inside the triangle is acceptable.



On Friday we've said that it would be better to wait and postpone long entry as price action was not very fascinating. As a result, daily triangle now is breaking down, increasing chances to reach 1.2050 K-support area making it attractive for short-term bounce trading. In the shed of light recent ECB statement, it seems that chances to reach 1.1950 area are also not weak.
Thus, on daily chart we're mostly focused on market's response to K-support area at first touch. We treat chances of direct upward continuation from 1.2050 as low.


Here is we follow to the same picture. Let's first focus on the targets that agree with daily K-area. Once they will be completed, we intend to keep an eye on reversal patterns on 1H chart. Here market has formed bearish reversal swing, dropping below "OP" lows, significantly increasing chances to reach predefined targets.


For the scalp trading it is also possible to keep an eye on recent 1H thrust, where either B&B or DRPO patterns might be formed:

Sive Morten

Special Consultant to the FPA
Morning everybody,

So, EUR is showing upward action right now and at the first glance it seems that we should forget about 1.2050 entry area as price is coming back into broken triangle. But, IMO it is too early to deny from bearish scenario, especially at the eve of Fed meeting:


If you carefully follows with market mechanics on 4H chart, you'll see that EUR shows not bullish price action and current action looks like retracement after Friday's drop. Take a look, once market hits the OP - it was not able to reverse and has shown just a retracement. Recent downside action is very strong that is not typical for bullish market - these two moments point on XOP target and 1.618 butterfly extension that have not been completed yet. Thus, I wouldn't consider current upward action as reversal by far and treat it as retracement of recent sell-off.
But, if EUR breaks 1.2170 K-area situation changes. Breakout of this level is inconsistent with bearish sentiment. In this case indeed, 1.2050 K-area hardly will be reached.

On 1H chart our DRPO "Buy" has started nice. Market definitely hits OP, and I would consider XOP as well by two reasons. First is - upward action is fast, second - XOP makes an Agreement with 4H K-resistance. Thus, with getting "222" Sell, K-resistance and Agreement area around 1.2070 - is enough to hold any bearish market. If price breaks it up - this tells us that market is not bearish anymore:

That's being said, we could consider short entry around 1.2070. If level will be broken up, position could be reversed on first 3/8 downside retracement. Currently only those who stepped-in on DRPO Pattern could hold longs. New long position here is a bit tricky to take.

Sive Morten

Special Consultant to the FPA
Morning everybody,

So, it seems that our doubts are not in vain as EUR shows difficulties with upward action. ON daily chart price action looks like small flag continuation under broken triangle line. It seems that we could get 1.2050 support area.

Current downside action reflects rising fears of the market. Flat Fed statement is priced-in long time ago and provides less and less support to dollar rivals. But stubborn statistics worries markets more and more. With possible Fed policy changes in September - market starts to worry. Recent reaction on CPI and counter-reaction later shows the value of Fed mantras. It is very short-term.

Yesterday, market was not able to climb to 1.2170 resistance level where we intended to go short, which means that after Fed statement market could go lower. Recent AB-CD pattern is erased now, and here it makes sense to consider the butterfly.

On 4H chart, theoretically, right after Fed blank statement market could show upside reaction and form upside AB-CD to the same 1.2170 K-resistance area, but downside reversal then looks very probable:

It means that for long entry it would be better to wait clarity on 1.2050 K-area on daily chart. Right now it seems that EUR still could reach it. For short entry - wait for first reaction on the Fed and keep an eye on 1.2170 resistance area. Market could go down with "222" Sell.

Sive Morten

Special Consultant to the FPA
Morning guys,

So, even with the blank Fed statement we've expected downside action, but this stunning hit has exceeded all expectations. Although Fed tells nothing new, because they already talked many times that rate will be changed not early than in 2023 and markets think the same but psychologically it was important that this information is publicly released in official statement.
This fact changes long-term sentiment on the market and could lead to starting of major reversal according to our long-term view...

Technically - market also stands around important area. Downside breakout of 1.19 level could lead to bearish chain reaction that could break existing upside long-term trend. This is the subject for our weekly report.

In short-term market has broken daily K-support and action mostly stops due oversold level. Thus, now we do not consider the new long position on daily chart by far. Although on intraday charts it is possible to do:

Since market stands at oversold and sentiment has changed drastically, we do not exclude deeper downside action in perspective of few weeks. On 4H chart it could take the shape of H&S pattern. Due oversold EUR could show some upside bounce. Perfectly it should be back to 1.2150 to keep the harmony of the pattern. But, it is more realistic that pullback will be to disrespected 1.2060 K-area and 4H K-resistance of 1.2080:

For scalp long position it would be better to wait some bullish patterns on 1H chart, where we do not see yet any, as collapse just has happened.


E/U is approching the monthly MACD. Could be a nice setup for a long next coming months, if SG will be formed of course.
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Sive Morten

Special Consultant to the FPA
Morning everybody,

So, it seems that Fed has frightened markets. Reaction is stronger than was suggested by information that Fed has provided. To be honest - this action is more the subject for our weekly report. Here I just tell that it is too bearish and could lead to the breaking of long-term bullish trends.

Tactically we have bullish Stretch pattern on daily chart. But, as it is obvious crush of bullish sentiment, we have to get intraday reversal patterns first. Second - the Stretch is not the pattern for reversal. The maximum that it could trigger is a pullback to some of resistance levels:

On 4H chart we do not have any reversal patterns by far. Drop was so strong yesterday that EUR has not formed the H&S pattern but dropped straight forward. So, on upward action it could re-test previous lows and 1.1985 area. Or, as we've said previously re-test broken daily K-support area 1.2050. Now this is also K-resistance here.

Thus, from technical point of view it is not good area for short position as price stands at daily support and oversold. For long position we have to wait for more context. Now we do not see yet the price action that suggests the pullback.