EUR/USD analysis: more gains expected on a break above 1.2350
EUR/USD Current price: 1.2327
- Market players keep ignoring macroeconomic data, sentiment rules.
- Fears of a global trade war could be offset by US wages' data this Friday.
The EUR/USD pair continued recovering ground on Friday and closed the week up by a handful of pips at 1.2327 after hitting an over 1-month low of 1.2154 on Thursday. Speculation that the US Federal Reserve could hike rates at least four times this year sent equities and yields lower at the beginning of the week, with the greenback reacting positively to the headlines and appreciating against most of its major rivals. Things took a turn for the worse, however, after US President Trump announced on Thursday his intentions of imposing tariffs on steel and aluminum imports, triggering risk aversion and hitting the greenback. Equities plunged, while the yen and gold advanced, as investors fear protectionism measures will do no good for the US economy.
The macroeconomic calendar had little to offer on Friday, but news coming from the EU were disappointing, as German Retail Sales fell 0.7% in January, with the annual reading shrinking to 2.3%, both well below market's forecast. The EU PPI for the same month, came as expected at 0.4% MoM, and retreated to 1.5% YoY amid a revision to previous figures. In the US, on the contrary, the Michigan Consumer sentiment index for February resulted at 99.7, beating expectations of 99.5. Market, however, remained focused on sentiment, situation that will likely extend next week.
Daily basis, the EUR/USD ended the day around its 20 SMA, while the Momentum indicator keeps heading south within negative territory, but the RSI turned higher to end around its mid-line, suggesting the recovery may extend without confirming it. Shorter term, and according to the 4 hours chart, the scale is lean toward the upside, as the pair recovered well above its 20 SMA, technical indicators maintain their bullish slopes within positive territory, while the pair ended the day near its daily high. The highs in the 1.2350 region come as the immediate resistance, with steady gains above it backing the case for an extension beyond the 1.2400 figure.
Support levels: 1.2300 1.2265 1.2220
Resistance levels: 1.2350 1.2390 1.2420
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.
