EUR/USD FORECAST: BULLS AWAIT A CONVINCING BREAK THROUGH H&S NECK-LINE RESISTANCE

The US Dollar moved higher during the second half of Tuesday's trading session and recovered early weakness to near seven-week lows, touched in the aftermath of new tariffs announced by China. Surging US Treasury bond yields, with the benchmark 10-year bond hitting its higher level since May, turned out to be one of the key factors prompting some USD short-covering. Meanwhile, the EUR/USD pair once again failed to make it through the 1.1720-30 heavy supply zone and finally ended in red, for the second session in the previous three.

The pair regained some positive traction during the Asian session on Wednesday, albeit remained well below the 1.1700 handle as investors continue to assess the latest escalation of US-China trade tensions. There isn't any market-moving economic data due for release from the Euro-zone, while the US economic docket offers housing market data - building permits and housing starts.

Technically, the 1.1720-30 region marks the neckline resistance of an inverted head & shoulders chart pattern on the daily chart and remains an important trigger for bullish traders. A convincing break through the mentioned barrier would confirm the bullish pattern and trigger an aggressive short-covering rally, even beyond the 1.1800 handle, towards its next major hurdle near mid-1.1800s.

On the flip side, any meaningful slide might continue to find immediate support near the 1.1610-1.1600 region, below which the pair could head back towards testing an important horizontal support near the 1.1530-25 horizontal zone. A decisive break below the mentioned support would invalidate the traditional bullish reversal pattern and turn the pair vulnerable to resume with its prior depreciating move. 

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