- The pair begins the week with a sharp dip following US data
- EUR/USD Bearish and Bullish perspectives
EUR/USD Early week analysis: Dips sharply following upbeat data in the US
The EUR/USD pair had a good start of the week, with the bulls taking control of the common currency across the board. Following the upbeat data in terms of manufacturing, according to IHS Markit in the Eurozone and Germany.
The Sentix Investor Confidence also grew from -16.8 to -4.5, providing an additional boost. However, it retraced and plummeted to test fresh daily lows around 1.1120, erasing the gains obtained on early Monday. In addition to the earlier bullish tone, the pair dropped sharply because of the data in the US that helped to provide momentum to the greenback, with the Dollar Index (DXY) treading waters around the 97.40 handle.
EUR/USD has continued trading below the 1.1130 zone. The bears are dominating the scene and taking it to test the bullish trend line drawn from the lows of October.
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Will the reign of the bears remain?
If the common currency manages to break such a zone, all eyes will target the 200 SMA, after breaking the key support and psychological level of around 1.1100. That moving average in the 4-hour chart should provide a strong demand zone, to place the pair onto the bulls’ radar for the short term.
However, once it breaks below that region, it’s expected to test the next key barrier around 1.1014, ahead of the key threshold that lies at the 1.1000 round-figure.
Bullish perspective for the pair
If EUR/USD manages to rebound finding support in the trend line, the rally could make it test the 1.1177 level. A high reached in mid-October.
If such an area gives up favouring the bulls, the next hurdle to overcome would be the 1.1230 level. Which was also a key resistance in August, helping to cap further gains together with the 200 SMA. EUR/USD broke the uptrend witnessed in October, since a negative RSI divergence aimed at slowing upside momentum. At the time of writing, fundamental factors continue to assemble towards the downside direction.
Traders will sit and wait how the pair interacts with the 1.1073 inflection point. Question is, will it bow or trade above it?