The EUR/USD pair is poised to end the week below the 1.1100 figure, and with a six-straight days' decline. There was no certain catalyst beyond this EUR weakness, but uncertainty among financial markets and weak oil prices had their fair share of blame.
Both Central Banks have offered dovish comments, expressing concerns over how Chinese economic slowdown may weight on local economies. There was, however, a slightly imbalance that favored the greenback: improved inflation figures. Last Wednesday, official data showed that wholesale prices in the US picked up in January, as the producer price index rose 0.1% in the month, much better than the 0.2% decline expected. The core reading was also higher, up 0.4% monthly basis and 0.6% compared to a year before, beating previous month readings and expectations.
On Friday, CPI data also surprised to the upside, with the CPI ex food & energy up by 2.2% yearly basis, and 0.3% compared to the previous month. Latest FED's announcement suggested that the next rate hike in the US has been put on hold, yet improved inflation data is exactly what officers need to bring it back. Still an early call, the market may turn back towards the greenback during the upcoming weeks, should local data continues to improve. Next week, the focus will be in the release of the latest Durable goods data, and housing.
View the Live chart of the EUR/USD
In the meantime, the technical picture suggests that an interim top has been reached at 1.1375 on February 11th, as the price is back below its 20 SMA this Friday, whilst the technical indicators have turned sharply lower, and are ready to cross towards negative territory. The pair has a strong support around 1.1040/50, and even a stronger one around the psychological 1.1000 figure. If this last is taken early next week, the decline can extend down to 1.0840.
The lower highs and lower lows daily basis suggest that it will take a sustainable recovery before calling for an upward continuation, meaning some stability above 1.1200 is required before attempting to buy. In such case, the pair will have its next resistances at 1.1280, and the 1.1360 region, en route to a major long term resistance at 1.1460.
Latest updates on the EUR/USD Forecast
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