EUR/USD analysis: needing a break beyond 1.0650
|EUR/USD Current price: 1.0572
The American dollar edged lower in quiet trading this Monday, with the Pound and the Japanese yen being the worst and the best performers respectively. As for the common currency, is barely 40 pips higher daily basis, as German data, despite from November last year, failed to confirm solid growth in the region. German´s Industrial Production increased by a meager 0.4% monthly basis, against expectations of a 0.7% gain, while October reading suffered a modest revision up to 0.5%. The annual reading came in at 2.2%, also missing market's forecast. The Trade Balance in the country for the same month was more encouraging, as the seasonally adjusted trade surplus widened to €21.7B, better than the €20.8B expected, with monthly imports up by 3.5% and exports by 3.9%. In the US, the FED´s Labor Market Conditions Index declined by 0.3 in December, against a previous gain of 1.5, usually seen as a sign of slowing in the sector, yet after the release of Friday's Payrolls, the news was far from a shock. Additionally, US policymakers reiterated their hawkish rhetoric, with Rosengren foreseeing more regular hikes.
The EUR/USD pair closed the day around 1.0565, the 23.6% retracement of the 1.1299/1.0340 decline, unable to rally, despite broad dollar's weakness. The pair is trying to bottom ever since the year started, and while there are no signs that the rally may continue, particularly amid self EUR weakness, those looking for parity seem to have taken a step to the sidelines. From a technical point of view, the 4 hours chart shows that the price is now standing above all of its moving averages, with the 20 SMA crossing above the 200 SMA after already surpassing the 100 one, usually a sign of a bullish continuation. Yet, in the same chart, the Momentum has turned south whilst the RSI indicator lacks enough strength and consolidates at 57. Also, failure to hold gains above 1.0600 during the past two weeks, suggests that a rally beyond 1.0650 is required to confirm the bullish extension.
Support levels: 1.0530 1.0490 1.0445
Resistance levels: 1.0580 1.0615 1.0650
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