EUR/USD Analysis: bullish potential persists despite fading optimism

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.1123

Risk-on led the way, but the positive sentiment faded ahead of the daily close.
European data failed to impress, EUR may fall once the political noise is over.
EUR/USD now heading toward 1.1160 resistance, as long as 1.1100 holds.

The EUR/USD pair has rallied to a fresh monthly high of 1.1139 this Thursday, as optimism took over the financial world, in spite news weren’t that encouraging after all. Nevertheless, headlines indicating that the UK and the EU reached an agreement sent Pound skyrocketing, dragging the EUR alongside. The positive momentum was later supported by rallying US equities, which opened firmly higher on the back of solid earnings reports, although indexes trimmed most of its intraday gains ahead of the close.

Data released this Thursday failed to impress, as EU´s August Construction Output declined by 0.46% monthly basis, slightly better than the -0.80% expected. The annual advance resulted at 1.2%, much worse than the 2.6% forecasted. In the US, Housing Starts plummeted 9.4% in September, while Building Permits declined by 2.7%. Initial Jobless Claims for the week ended October 11 resulted in 214K, better than the 215K expected, while September Industrial Production and Capacity Utilization missed the market’s expectations. This Friday, the EU will release its August Current Account, while in the US, several Fed officials are scheduled to speak.

EUR/USD short-term technical outlook

The EUR/USD pair is finishing the day above the 1.1100 figure, maintaining a positive short-term technical stance. In the 4 hours chart, it settled far above all of its moving averages, with the 20 SMA extending its advance above the larger ones. The Momentum indicator keeps heading north, despite being in extreme overbought territory, while the RSI indicator turned flat at around 75, with no signs of turning lower. The daily high converges with the 100 DMA, which means that a break above it could trigger stops and fuel the advance toward the 1.1200 region. Chances of a bullish extension will decrease if the pair loses the 1.1100 level.

Support levels: 1.1100 1.1065 1.1030

Resistance levels: 1.1145 1.1180 1.1210

View Live Chart for the EUR/USD

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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