EUR/USD Forecast: scope to advance up to 1.0840
|The EUR/USD pair extended its advance up to 1.0771 early Asia, but pulled back from the level, easing towards the 1.0730 region early London, overall maintaining the positive tone. Data coming from Europe was mixed, as according to preliminary Markit PMIs, the services sector grew at a slower-than-expected pace at the beginning of 2017. Still, in Germany, manufacturing is estimated to have grew by 56.5 against previous 55.6, with the composite output is estimated at 54.7 for the month. In the EU, the services PMI index came in at 53.6, its lowest in 3 months, whilst the manufacturing one rose to 55.1, its highest in 69 months.
Later today and in the US, attention will be on the preliminary Markit Manufacturing for January, and December Existing Home sales.
As for the technical picture, the figures have helped the common currency to bounce modestly from a daily low of 1.0734, hovering mid-way within a limited intraday range. In the 4 hours chart however, the 20 SMA has accelerated its advance below the current level, now converging with the 38.2% retracement of the November/January decline at 1.0710, whilst technical indicators have resumed their advances within positive territory, after a limited downward correction from overbought levels, indicating that the risk remains towards the upside.
The pair met selling interest around a bearish 100 SMA at the mentioned 1.0770 level, and further gains beyond the level can take the pair up to the 1.0800/40 region, a critical resistance area that won't give up easily. Below 1.0710 on the other hand, the pair can correct lower, with the next supports at 1.0660 and 1.0610.
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