It has weakened against the dollar and Japanese yen but gained some ground against the New Zewland dollar. Over the past few weeks, the EURUSD has found itself within a very wide range with resistance at 1.2200 and support at 1.2000. Given how prices have cut below the 100 Simple Moving Average and pressing down fiercely against the 1.2000, the path of least resistance certainly points south.
The technicals swing in favour of bears on the daily timeframe. Prices are trading well below the 20 & 50 Simple Moving Average while the MACD trades to the downside. A solid daily close below 1.2000 could inspire a decline towards 1.9500 and 1.1920. Should 1.2000 prove to be reliable support, a rebound back towards 1.2050 and 1.2130 could be on the table.
Although the technicals are turning increasingly bearish, the fundamentals could still throw a proverbial wrench in the works for sellers. Later this morning, the Eurozone inflation reading and Germany’s unemployment rate will be published. Markets are expecting inflation to hold steady at 0.9% while the core reading is forecast to cool from 1.4% to 1.1%. The unemployment rate in Europe’s largest economy to projected to hold steady at 6%, unchanged from January.
Back to the technicals…
It is a different story on the weekly charts for the EURUSD. Prices respecting a bullish weekly channel and there have been consistently higher highs and lows. This is bull territory with bears under threat if prices trade back above 1.2150. A strong weekly close below 1.2000 could give the thumbs up for sellers to target 1.1900 and 1.1700.
1.20 pivotal on monthly timeframe
It is safe to say that the EURUSD remains bullish on the monthly timeframe. Prices are trading above the 100 SMA while the Relative Strength Index has yet to hit overbought levels above 70.00. If 1.2000 can hold the fort and keep bears out, prices could rebound back towards 1.2348. However, a solid monthly close below 1.2000 is likely to spell trouble for the bullish trend with the next key point of interest around 1.1600.
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