EUR/USD Forecast: waiting for the correct catalyst
|The EUR/USD pair trades uneventfully around 1.0550, half way of its weekly range, after another quiet Asian session that saw majors consolidating within limited ranges. There were no relevant macroeconomic releases in the EU, and the US calendar will also remain light, with market's attention focused on a speech from upcoming US President Donald Trump.
Despite the American currency has been trading with a soft tone ever since the year started, easing the strong post-US election upward momentum, the common currency has been unable to benefit, weighed by political risks ahead in the region, including elections in France and the Brexit. Also, the imbalance between Central Banks has widened last December, when the ECB decided to extend its QE beyond market's expectations, and the FED hiked rates, indicating that it will probably accelerate the pace of tightening this 2017. The background scenario is dollar bullish, and it will take just the correct catalyst to see the currency resuming its advance.
From a technical point of view, the 4 hours chart shows that the price remains limited towards the upside by a modestly bearish 20 SMA that converges with the 23.6% retracement of its latest monthly decline in the 1.0560/70 region, although the price has stabilized above the 100 SMA this week. In the same chart, technical indicators head modestly higher within positive territory, but with no directional strength, this last suggesting that selling interest in the short term remains side-lined.
The pair has been having a hard time to hold gains above the 1.0600, with spikes up to 1.0619 and 1.0626 earlier this week being quickly rejected. Only above 1.0650, December 29th high, the pair can continue advancing with 1.0710 as the next probable bullish target.
Below 1.0490 the risk turns towards the downside, with 1.0445, and 1.0400 as the next intraday supports and probable bearish targets.
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