EUR/USD analysis: bulls have a chance above 1.1420
|EUR/USD Current Price: 1.1414
- EU data released last week was in-line with slowing economic growth extending into 2019.
- US government re-opens for three weeks, Trump will shut it back down if he doesn't get border wall funding.
Having spent the week strengthening against most of its rivals, the American dollar abruptly changed course Friday to end the week in the red. The EUR/USD pair surge up to 1.1417, settling a couple pips below the level. There was no clear catalyst behind the greenback's slump although a report suggesting that Fed officials have been discussing the possibility of ending its balance sheet reduction, clearly helped by boosting appetite for riskier assets. The dollar was also hurt by the US Government partial shutdown, which turned to be the longest in the country's history. Late Friday, US President Trump announced he signed a bill to fund the government for three weeks, up to February 15, signaling it was no concession to Democrats, but for the good of the people getting hurt by the shutdown. He added that the government will go back to shutdown if no border wall deal is achieved by that date.
The EU data released last week was generally soft and in-line with slowing economic growth extending into 2019, and would likely prevent the common currency from appreciating firmly in term, which doesn't mean it could keep on rallying next week. The US macroeconomic calendar these days will be quite erratic, as many of the events delayed could be published. However, the attention will gather around the Fed's meeting next Wednesday and the US NFP report on Friday. This Monday, ECB's head, Mario Draghi, will testify about the economy and monetary policy before the European Parliament Economic and Monetary Affairs Committee, although chances that he can surprise speculative interest are quite limited
From a technical point of view, the daily chart shows that the recovery stalled around the 50% retracement of the December/January rally, also around a flat 20 DMA. The 100 DMA converges with the 38.2% retracement of the same advance at around 1.1455, acting as a strong resistance in the case the advance continues, while technical indicators remain in negative ground, having lost their downward strength but falling short of confirming a steeper advance ahead. In the shorter term, and according to the 4 hours chart, the bullish case is a firmer, as technical indicators re-entered bullish territory while the pair surpassed its 20 and 200 SMA, stalling around the 100 SMA, which stands directionless around the mentioned Fibonacci resistance in the 1.1420 price zone.
Support levels: 1.1380 1.1340 1.1300
Resistance levels: 1.1420 1.1455 1.1490
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