EUR/USD analysis: bullish potential keeps growing

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1849

EU Markit PMIs beat expectations, signaling steady growth in the region.
German IFO and US Markit PMIs taking center stage on Friday.

The EUR/USD pair neared its monthly high this Thursday, hitting 1.1855 during the European session and holding nearby afterward, amid volumes plummeting due to US Thanksgiving holiday. The American dollar remained under pressure after FOMC's Minutes showed that policymakers are concerned about stubbornly low inflation which is affecting their decisions about monetary policy beyond December. Data coming from Europe backed the common currency, as the November preliminary PMIs were above expected, with manufacturing output rising to 60.0 from the final October reading of 58.5, its highest in nearly seven years. Also, the ECB released the Minutes of its latest meeting, but as expected, the document didn't add anything to what the market already knew. A minor note of color came from the duration of QE, with policymakers agreeing on keeping it open-ended, despite a few wanted a clear end date. This Friday, Germany will release its November IFO survey, holding around October levels, while the US will see the publication of November preliminary Markit PMIs, expected slightly above final October readings.

From a technical point of view, and considering the fact that the pair has held above the support area around 1.1820/30, the risk remains towards the upside according to short-term technical readings, as in the 4 hours chart, the price is well above a now bullish 20 SMA, as the Momentum maintains its bullish slope near overbought readings, and the RSI consolidates around 68. Furthermore, the pair is holding above the key 1.1790 level, the 23.6% retracement of the latest bullish run. The pair has a strong resistance at 1.1890, where selling interest capped the advance for most of October. Beyond it, and approach to the 1.2000 threshold becomes more than likely.

Support levels: 1.1830 1.1790 1.1745

Resistance levels: 1.1860 1.1890 1.1925

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Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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