EUR/USD Price Forecast: Correcting lower with the near-term bullish trend intact

On Thursday, the Euro (EUR) maintained a relatively stable position against the US Dollar (USD) as the weekly chart revealed a slight bearish correction after reaching overbought levels from late July lows. The EUR/USD rate dropped to the 1.1650 area from last week's highs surpassing 1.1700, yet the near-term bullish trend remained intact.

German economic indicators have been relatively positive, with the GfK Consumer Sentiment Index indicating increased optimism among German consumers regarding their income and the overall economic situation. However, traders remain cautious about making significant USD directional bets, waiting for Federal Reserve (Fed) Chair Jerome Powell's speech at Jackson Hole on Friday for further clarity on the central bank's monetary policy plans.

Despite failing to surpass the late May highs at 1.1685, EUR/USD bulls have been struggling to gain traction upward, resulting in a mild bearish correction this week. The near-term outlook for EUR/USD is predominantly positive, as the current spot price is above the resistance level of 1.1620, and momentum indicators remain in bullish territory.

The daily Relative Strength Index (14) is above 65, and the Moving Average Convergence Divergence (MACD) indicator displays modest positive values, indicating constructive momentum as the Euro continues to recover from the mid-1.14s. The initial support level is identified at the horizontal price around 1.1620, which corresponds to the highs from June 16 and August 17 in the past.

Further down, support levels could be found closer to the August 18 and 19 lows near 1.1570 and the early August lows just above 1.1500. On the upside, the confluence of the May 29 high at 1.1685 and the 78.2% Fibonacci retracement level of the May-June selloff at 1.1692 might pose a challenge for EUR/USD to surpass and potentially reach the early May highs near 1.1790.