EUR/USD Price Forecast: Bulls await breakout above 1.1270 resistance, range top

The EUR/USD currency pair experienced a positive trend for two consecutive days, trading near the 1.1265 region during the Asian session. This was close to the one-week high it reached the previous day. The US Dollar (USD) hit a new low since late September due to Democratic victories in the US midterm elections, which raised concerns about fiscal gridlock and potential government spending limitations.

Additionally, hopes for an end to the Iran war affected oil prices, easing inflation fears and contributing to a further decrease in US bond yields. These factors counteracted expectations of a US Federal Reserve (Fed) rate hike, weakening the USD and supporting the EUR/USD pair. On Wednesday, Eurozone annual headline inflation rose to 4.0%, the highest in three years, which increased the likelihood of a 25-basis-point (bps) interest rate hike by the European Central Bank (ECB) in December, further bolstering the shared currency and driving the EUR/USD pair higher.

However, concerns over France's mounting debt levels and political deadlock might restrain Euro bulls from making large bets and cap the currency's gains. From a technical standpoint, the EUR/USD pair is trading above the 200-period Simple Moving Average (SMA) on the 4-hour chart. Traders are waiting for a breakthrough above the 1.1270 level, which serves as the top boundary of a one-month-old range.

Momentum indicators show a bullish near-term bias, with the Relative Strength Index (RSI) just below the overbought threshold and the Moving Average Convergence Divergence (MACD) line remaining positive. Therefore, the EUR/USD pair still maintains control in the short term. However, a breakdown near the 1.1270 barrier would indicate weakening bullish momentum and push the pair towards sub-1.1200 levels, exposing the lower range of the trading zone, around 1.1120-1.1110.

If this support level is breached decisively, bearish traders might gain an advantage, and a prolonged downtrend from the past two months may resume.