• An Inverted Flag formation is bolstering the greenback bulls for a downside move towards 1.0300.
• The greenback bulls have defended the 50-EMA, which marks a major hurdle.
• A (40.00-60.00) range move by the RSI (14) is favoring consolidation ahead.

The EUR/USD pair has attracted some significant offers around 1.0400 in the Tokyo session amid a rebound in the positive market sentiment. A recovery in the asset is observed after a sheer downside move from Thursday’s high at 1.0774. The pair has turned sideways in a range of 1.0397-1.0418 from the last two trading sessions.

The formation of an Inverted Flag chart pattern on an hourly scale is indicating a consolidation phase after a sheer downside move, which will be followed by a fresh leg of selling in the counter. Usually, a consolidation phase denotes inventory distribution by the initiative sellers, who enter an auction after an establishment of a bearish bias.

The greenback bulls have confidently defended the 50-period Exponential Moving Average (EMA) at 1.0485, which adds to the downside filters.

Meanwhile, the Relative Strength Index (RSI) (14) is oscillating in a 40.00-60.00 range, which signals a continuation of a rangebound move.

A slippage below Monday’s low at 1.0400 will trigger the Inverted Flag formation and will drag the asset towards May 12 low at 1.0350, followed by the round-level cushion at 1.0300.

Alternatively, the shared currency bulls could regain their glory if the asset oversteps Tuesday’s high at 1.0485. An occurrence of the same will send the asset towards May 20 low at 1.0571. A breach of the May 20 low on the upside will drive the asset towards the round-level resistance at 1.0600.

EUR/USD hourly chart