EUR/USD analysis: quick comeback from 1.0500 maintains the risk towards the downside

Valeria Bednarik FXStreet

EUR/USD Current price: 1.0439

The EUR/USD pair edged marginally higher for a second day in a row, having jumped up to 1.0499 mid American session, following the release of weaker-than-expected US income and expending data. Personal spending rose 0.2% in November versus 0.3% expected while incomes were essentially unchanged in the same period, against 0.3% expected. Meanwhile, the personal consumption expenditures (PCE) price index, the Fed’s preferred gauge of inflation, was unchanged in November, after a 0.3% monthly increase in October and a 1.4% when compared to a year earlier.

Earlier in the day, the final revision of US Q3 GDP came in at 3.5%, beating expectations of an upward revision to 3.3%, whilst Durable Goods Orders beat expectations, but still came in negative, with demand for all durable items falling 4.6% against an expected 4.7% decline. The core reading, excluding aircraft, rose 0.9% after a 0.2% gain a month earlier. Weekly unemployment claims, surprised to the upside, rising by 275K in the week ending December 16.

The technical picture continues favoring additional slides, given that the pair retraced sharply after testing the mentioned the daily high, and ends the day not far from its daily low of 1.0425. The price is above a mildly bearish 20 SMA, in the 4 hours chart, while technical indicators in the same chart have lost upward strength and begin turning south with the RSI currently breaking below its 50 level. Short term buyers have been surging around 1.0420, the immediate support, although a break below 1.0390 is required to confirm a retest of the year low in the 1.0350 region.

Support levels: 1.0420 1.0390 1.0350

Resistance levels: 1.0460 1.0500 1.0545

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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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