EUR/USD is making corrections trading with higher volatility at near 1.1200 for a few days. Earlier, the price broke below the area with a daily close. USD lost steam for a while struggling for gains versus EUR despite the positive US nonfarm payrolls released on May 2.

Yesterday the Sentix research group published a survey on the eurozone's investor confidence. The index rebounded sharply to 5.3 from the previous figure of -0.3 which was expected to be at 1.1. The report on eurozone's retail sales came in better than expected at 0.0% from the previous value of 0.5% surpassing the forecast for -0.1%. Today the EU Economic Forecast report is going to be published which will include the forecasts for EU member states over next two years covering about 180 variables.

Recently, ECB's Chief Economist Praet dived into the debate over whether the ECB needs to review its interpretation of price stability during the ongoing economic slowdown. Consumer inflation has stuck at the level under 2%. So, CPI growth has undershot the inflation target of 2% for a few years despite stimulus programs worth trillions of EUR. Peter Praet is concerned about the ECB's role when another recession hits the global market as the economy is still quite feeble and the ECB has failed to tackle this problem promptly. The central bank must consider a monetary policy case if it is to deal with a multi-tier deposit rate.

On the USD side, it lost momentum for a while. So, the pair stuck quite well below 1.1200 despite strong employment growth in the US and a low unemployment rate in April. According to Fed's policymakers, weakness in US inflation could be "transitory," suggesting no reason to adjust monetary policy at this point. Powell surprised markets last week by saying that lower inflation trends could be explained partly by "transitory" factors, including fund management fees, apparel prices, and air fares. The remarks were seen by some investors as more aggressive on possible inflation risks than expected. As the labor market is strong as well as US economic growth currently, the gains on the USD side can be seen but not much of impulsive pressure is expected in the short term.

This week on Friday, US CPI report is going to be published which is expected to be unchanged at 0.4% and Core CPI is expected to tick up to 0.2% from the previous value of 0.1%.

To sum up, the US is facing inflation challenges and Fed's monetary policy. On the other hand, the eurozone has been going through the economic slowdown and ECB's ineffective measures. So, EUR/USD is going to trade with higher volatility this week. However, USD is expected to hold the upper hand in the currency pair in the short term.

Now let us look at the technical view. The price is currently being held by the strong resistance area of 1.1200 area and by the dynamic level of 20 EMA as resistance as well. Amid price corrections and higher volatility, the overall trend is still bearish. As the price remains below 1.1200-1.1300 resistance zone, further bearish pressure is expected in this pair with a target towards 1.1050 support area in the future.