<p>On the daily chart below, we can
see that the price has been trading in a falling channel for a quarter now. The
USD lost ground on the back of falling <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ class=“terms__main-term“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa“ target=“_blank“>inflation</a> and rate cuts being priced for
this year. </p><p>Recently things changed as the
blockbuster <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“>NFP</a> report yet again showed an
extremely tight labour market and the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“>ISM
Services PMI</a> jump back into expansion triggered a repricing of
rates expectations. We can also see that the channel is <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a>. </p><p>Generally, this loss of momentum
triggers a pullback to the nearest support/resistance or <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> before another leg lower/higher.
</p><p>In fact, the price pulled back to
the top of the channel and if we see it breaking up, then a much bigger
correction may kick in with the price possibly rallying all the way back up to
0.96 and the 50% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level. </p><p>On the 4 hour chart below, we can
see that after reaching the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a>, the price pulled back to the
50/61.8% Fibonacci retracement area. The price bounced there as the <a target=“_blank“ href=“https://www.forexlive.com/news/us-january-cpi-64-yy-vs-62-expected-20230214/“>US
CPI report</a> yesterday showed that the disinflationary trend is
slowing and the M/M inflation rate is still too high. </p><p>In fact, <a target=“_blank“ href=“https://www.forexlive.com/centralbank/december-fed-funds-pricing-hits-5-20230214/“>the
market repriced</a> future interest rates expectations with the
terminal rate moving up a bit and rate cuts being priced out. The range now is
clear: get above the resistance at 0.9287 and the breakout is confirmed with
further upside expected, get below the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 0.9150 and the sellers will
start to target the low at 0.9050.</p><p>On the 1 hour chart below, we can
see that the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> are now pointing north and the price is right at the upper bound of the
channel. Today we have the <a target=“_blank“ href=“https://www.forexlive.com/news/why-wednesdays-us-retail-sales-report-could-be-stronger-than-expected-20230214/“>US
Retail Sales</a> report, which is expected to be positive. A beat
to the expectations should give us the breakout higher, while a miss should
give us another pullback to the support zone at 0.9150. </p>
see that the price has been trading in a falling channel for a quarter now. The
USD lost ground on the back of falling <a target=“_blank“ href=“https://www.forexlive.com/terms/i/inflation/“ class=“terms__main-term“ id=“ad51a5a2-1afc-4f42-9e62-ea6faf6f90fa“ target=“_blank“>inflation</a> and rate cuts being priced for
this year. </p><p>Recently things changed as the
blockbuster <a target=“_blank“ href=“https://www.forexlive.com/news/us-nonfarm-payroll-517k-vs-185k-estimate-unemployment-rate-34-vs-35-estimate-20230203/“>NFP</a> report yet again showed an
extremely tight labour market and the <a target=“_blank“ href=“https://www.forexlive.com/news/ism-us-nonmanufacturing-pmi-index-552-versus-504-estimate-20230203/“>ISM
Services PMI</a> jump back into expansion triggered a repricing of
rates expectations. We can also see that the channel is <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-divergence-20220429/“>diverging</a> with the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-macd-20220427/“>MACD</a>. </p><p>Generally, this loss of momentum
triggers a pullback to the nearest support/resistance or <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-trendlines-20220406/“>trendline</a> before another leg lower/higher.
</p><p>In fact, the price pulled back to
the top of the channel and if we see it breaking up, then a much bigger
correction may kick in with the price possibly rallying all the way back up to
0.96 and the 50% <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-using-fibonacci-retracements-20220421/“>Fibonacci
retracement</a> level. </p><p>On the 4 hour chart below, we can
see that after reaching the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>resistance</a>, the price pulled back to the
50/61.8% Fibonacci retracement area. The price bounced there as the <a target=“_blank“ href=“https://www.forexlive.com/news/us-january-cpi-64-yy-vs-62-expected-20230214/“>US
CPI report</a> yesterday showed that the disinflationary trend is
slowing and the M/M inflation rate is still too high. </p><p>In fact, <a target=“_blank“ href=“https://www.forexlive.com/centralbank/december-fed-funds-pricing-hits-5-20230214/“>the
market repriced</a> future interest rates expectations with the
terminal rate moving up a bit and rate cuts being priced out. The range now is
clear: get above the resistance at 0.9287 and the breakout is confirmed with
further upside expected, get below the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-support-and-resistance-20220405/“>support</a> at 0.9150 and the sellers will
start to target the low at 0.9050.</p><p>On the 1 hour chart below, we can
see that the <a target=“_blank“ href=“https://www.forexlive.com/Education/technical-analysis-understanding-moving-averages-20220425/“>moving
averages</a> are now pointing north and the price is right at the upper bound of the
channel. Today we have the <a target=“_blank“ href=“https://www.forexlive.com/news/why-wednesdays-us-retail-sales-report-could-be-stronger-than-expected-20230214/“>US
Retail Sales</a> report, which is expected to be positive. A beat
to the expectations should give us the breakout higher, while a miss should
give us another pullback to the support zone at 0.9150. </p>
This article was written by ForexLive at www.forexlive.com.