The EUR/USD pair recovered from the low of 1.0957 to trade above 1.10 levels on Wednesday as slid in oil prices pushed US equities lower and triggered carry unwind. But, further gains were capped following the oil-led recovery in stock markets. Asian equities traded mixed, while European equities rallied today, thereby restricting the gains in the pair at 1.1039 levels.
Consequently, a horribly weak data (and drop in equities) could help EUR/USD pair move above its 200-DMA at 1.1047. The US equities are pointing to a positive open and a strong data would only add to the bullish tone in equities and send EUR/USD lower to 100-DMA at 1.0955.
_20160225101753.png "EURUSD H1 chart")
US durable goods data needs to influence equities
The Fed rate hike bets are more sensitive to the financial market volatility and US labor market performance. Hence, the traders may overlook US durable goods data due later today. Moreover, the data needs to affect the US equities in order to see action in the EUR/USD pair. The EUR is more sensitive to equity market moves ever since it took up the role of a funding currency (ECB moved to negative territory).Consequently, a horribly weak data (and drop in equities) could help EUR/USD pair move above its 200-DMA at 1.1047. The US equities are pointing to a positive open and a strong data would only add to the bullish tone in equities and send EUR/USD lower to 100-DMA at 1.0955.
Technicals – Bullish price-RSI divergence on hourly chart
- The hourly chart shows a bullish price-RSI divergence; hence the spot appears poised to revisit 200-DMA at 1.1047 unless the pair falls below 1.0990.
- A break above 200-DMA would expose 1.1088-1.11 levels.
- On the other hand, a daily close below 1.0955 (100-DMA) would mean the continuation of the downtrend that began from the high of 1.1714 (Aug 2015 high).
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