EUR/USD: Sidelined in a pennant pattern, eyes German CPI release

• The EUR/USD pair continues to trade in the sideways manner inside a pennant pattern.
• Focus on German preliminary CPI reading.

The EUR/USD pair remains trapped in a narrowing price range or pennant pattern.

At press time, the currency pair is trading at 1.1650, having created a bearish outside-day candle on Thursday. So, technicals are biased to the bears, meaning the pair could find acceptance below 1.1598 (base of the pennant pattern) if the preliminary German consumer price index (CPI) misses estimates.

On the other hand, an above-forecast preliminary German consumer price index (CPI) may push the spot above 1.1735 (pennant resistance).

The data is due at 12:00 GMT and is expected to show the CPI rose 0.4 percent month-on-month in July from June's print of 0.1 percent.

EUR/USD Technical Levels

A break below 1.1598 (pennant support) would validate Thursday's bearish outside-day candle and allow a drop to 1.1508 (June 21 low + 50-month MA). A violation there would expose support lined up at 1.1448 (50% Fib R of Jan 2017 low - Feb 2018 high) and 1.1370 (200-week MA).

On the higher side, a move above 1.1735 (pennant resistance) would open up upside towards 1.18 (psychological hurdle) and 1.1852 (June 14 high).