EUR/USD analysis: next hurdle at 1.2445, Draghi´s triggered high

EUR/USD Current price: 1.2404

  • Trump´s decision to fire his Secretary of State put the greenback in sell-off mode.
  • German inflation and US Retail Sales to take center stage this Wednesday.

The greenback had a really bad day, with policy overshadowing data, as it has been usual these last months. News that US President Trump fired Secretary of State Rex Tillerson and replaced him with the CIA director, Mike Pompeo, was a bomb that gathered all of the market's attention. The dollar remained under pressure all through the day, losing ground against all of its major rivals but the CAD, which took a hit from dovish words from BOC Governor Poloz. Trump ousted Tillerson due to divergences in foreign policies, with Trump clearly having a more aggressive stance. The US also released its February inflation, which remained stable, up 1.8% yearly basis as expected, and while still below the Fed's 2.0% target, is indeed heading into the right direction and hard enough to turn the US Central Bank more conservative.

This Wednesday, Germany will release its February inflation figures, seen unchanged from previous estimates, while the US will release its February Retail Sales data, seen bouncing after the negative surprise from January. The focus will be on the Retail Sales Control Group number, as it is used to construct  Personal Consumption Expenditure,  which is the Fed's favorite gauge of inflation.

The EUR/USD pair reached the 1.2400 area in the US afternoon, its highest since last Thursday, when a dovish Draghi sent it nose diving 200 pips, maintaining the positive tone according to the 4 hours chart, as the pair pressures its daily highs despite technical indicators lost upward momentum, anyway holding near overbought levels. Furthermore, and in the mentioned chart, the pair surpassed all of its moving averages with a long candle, which represents strong buying interest, while also ending the day above the 23.6% retracement of the previous two weeks' rally at 1.2375, now the immediate support. The high of such rally, at 1.2445 is now the immediate resistance, with a break above it exposing the 1.2480 region, where the pair has multiple intraday highs and lows from these last two months.

Support levels: 1.2290 1.2265 1.2220                                                                     

Resistance levels: 1.2340 1.2380 1.2420

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