EUR/USD analysis: holidays to keep volumes thin, sentiment the main market motor
|EUR/USD Current price: 1.2410
- US political jitters to keep the greenback under pressure, despite Friday's recovery.
- Strong US macroeconomic fell short of reversing the negative sentiment toward the greenback.
After being under pressure all through the week, the greenback edged higher on Friday but stayed well-short of trimming its weekly losses. The EUR/USD pair closed at 1.2410, reversing its previous weekly slump, and reached these last days, a fresh 3-year high of 1.2554. Political jitters in the US kept indexes and bond-yields swinging back and forth, somehow offsetting concerns about higher inflation, as the focus shifted to the country's deficit, now seen skyrocketing to $1 trillion for 2019, as a consequence of the tax cut and the latest expending plan approved by the Congress. Dollar's gains on Friday can be attributed to some solid macroeconomic figures, but also to profit-taking ahead of a long weekend. The housing sector seems to have picked up in January, as Housing Starts jumped 9.7%, while Building Permits surged by 7.4%, doubling market's expectations. The preliminary February Michigan Consumer Sentiment index came in at 99.9, surpassing expectations of 95.5 and reaching its second-highest level since 2004.
China, the US, and Canada will be on holidays this Monday, which means no big news will come from there, while the EU will only release minor figures. For the rest of the week, there are no first-tier reports scheduled, which leaves chances of further sentiment-related trading high.
Technically, the daily chart shows that the pair may have to have started drawing a double top around 1.2540/50, although the neckline of the figure, which will confirm the formation is the low set on February 9th at 1.2205. In the same chart, the pair settled above the 20 DMA, which losses upward strength and currently stands at 1.2390, while technical indicators eased, the Momentum pressuring its 100 level, and the RSI at 57, suggesting the downward correction may continue, particularly on a break below 1.2390, although the decline will remain a correction. Shorter term, and according to the 4 hours chart, the pair is at risk of correcting further lower, as it broke below its 20 SMA, while technical indicators are crossing into negative territory with strong downward slopes. The 100 SMA stands around the mentioned 1.2390 region, reinforcing the relevance of the support.
Support levels: 1.2390 1.2355 1.2320
Resistance levels: 1.2445 1.2480 1.2520
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