The USD has posted a moderate recovery against the EUR since the open of today’s forex session. As my colleague Skerdian covered earlier, the FOMC minutes were not absolute in terms of a December rate hike. The result was weakness in the USD as we came into today’s session.

News items of this nature are useful in that they give us some volatility to play with. Today’s action in the EUR/USD has set us up for opportunity going into Friday’s session.

Technicals

Rotation has been the common theme in my earlier updates. The technical outlook for the EUR/USD is very similar.

EUR/USD, Daily Chart

Today’s close will be crucial to the intermediate-term trading potential of the EUR/USD. Currently, we are seeing price consistently trade 1.1850, smack in the middle of the Daily SMA and Bollinger Midpoint.

A few observations facing this market:

• Since the early September high of 1.2091, the trend is down.

• Upside resistance levels at the Daily SMA and Weekly 50% retracement have held.

• Extended resistance levels at 1.1900 and 1.1930 may come into play by week’s end.

• There is considerable downside support from 1.1819 to 1.1800. The Bollinger MP, 20 Day EMA and the round number of 1.1800 are in the vicinity.

For now, I am in wait and see mode. If today’s trade closes near current levels, this market may be primed for a bearish run during tomorrow’s session.

Bottom Line: As with many of the majors, the EUR/USD appears to be in a holding pattern ahead of tomorrow morning’s U.S. CPI release. CPI is an inflationary metric. The inflation target of 2% is the FED’s number one reason to hike rates. If the number comes in as a surprise, high degrees of volatility will ensue.

Be sure to tune in to FX Leaders ahead of tomorrow’s CPI release at 8:30 AM EST. My colleagues Rowan, Arslan, and Skerdian will have everything you need to know to attack this market successfully.