EUR/USD Forecast: Bundesbank sees a boom and Euro bulls can smile as well
|- The German Bundesbank report is the notable event on a quiet day, and it is quite bullish on the German economy.
- The EUR/USD daily chart point to further gains.
The EUR/USD is trading slightly higher, just above $1.2400, in a quiet day. Many Asian markets are still celebrating the Chinese New Year while the US and Canada enjoy their own bank holidays. This atmosphere is quite different from the drama we had last week, with the pair reaching new three-year highs before retreating.
Germany is not on holiday and the economy isn't on vacation either. According to the monthly report by the Bundesbank, Germany's central bank, the economy is growing at a rapid clip. The industrial sector is leading the charge ahead and the usually orthodox institution says that the economy is booming. They forecast another strong year in 2018.
Germany is considered the locomotive of the euro-zone and continues leading its exports. The most recent Current Account measure continues showing a wide surplus €29.5 billion.
The Italian elections are due on March 4th and they are getting closer. However, both the 5-Star Movement and the League have abandoned their pledge to leave the euro-zone, lowering the risk from the elections.
EUR/USD: Bullish Technical Picture
The current calm in trading allows a better examination of the turbulence we have seen last week. EUR/USD traded at a range of over 300 pips in high volatility but did make notable marks on the chart.
The pair reached a low of $1.2235, higher than $1.2205 in the previous week and also above the trough of $1.2160 in early January. It also reached the highest level since December 2014, at $1.2555, moving beyond the previous 2018 peak of $1.2537.
EUR/USD thus marked higher lows and higher highs, a bullish sign.
The pair also trades above the 50-day Simple Moving Average and well above the 200-day SMA. An uptrend that is drawn from late last year also shows a clear uptrend.
The RSI, which has neared overbought territory, points to healthy gains ahead, standing above 50 and also Momentum remains positive.
The $1.2555 level is the next significant line of resistance. It is followed by $.12650, which is where the decade-long downtrend meets the chart this month. This level could be of crucial importance.
On the downside, $1.2340 was a stubborn line of support in January and $1.2205 is the next line to watch.
More: Live Chart of EUR/USD
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