EUR/USD analysis: struggling for direction as ECB's meeting looms
EUR/USD Current price: 1.2252
- US data mixed, improvements in employment but housing disappointed.
- The macroeconomic week will close with the Michigan consumer sentiment index.
The EUR/USD pair continued struggling for direction the last couple of sessions and after a volatile Wednesday, which ended with the pair establishing a fresh weekly low of 1.2164. The backs and forths around the common currency were partially a consequence of the absence of fresh clues coming from the EU, as the Union's macroeconomic calendar has been quite scarce this week, with nothing to offer this Thursday. But that's not the only reason. Investors have turned cautious with the pair at current levels, despite the dollar remains unattractive, as the ECB's monetary policy meeting looms. The central bank will meet next week, and there are big chances that the main focus of the meeting will be trying to cool down buying enthusiasm around the common currency.
US data didn't help the greenback, still indicating solid economic growth but missing market's expectations. The Philly Fed manufacturing survey slipped to 22.2 in January after an upwardly revised 27.9 in December, while Housing Starts fell 8.2% in December, worse than the -1.7% expected. Building Permits, however, fell by 0.1%, better than the -1.0% expected, while weekly unemployment claims fell to 220K, beating expectations of 250K. For this Friday, the EU will offer its November Current Account, while the US will close the macroeconomic week with the preliminary Michigan consumer sentiment index for January, expected at 97.0 from previous 95.9.
The EUR/USD pair gained some partial traction upward in the US afternoon, surpassing by a handful of pips a flat 20 SMA, while technical indicators have managed to re-enter positive territory, with the Momentum slowly advancing and the RSI flat around 60. Still, and considering the price remains within familiar ranges, further gains can't be confirmed at the time being. An acceleration upward through 1.2280 should lean the scale towards the upside and favor a re-test of the 1.2322 high, while beyond this last, the rally can continue up to 1.2350. Below 1.2200, lower lows are likely, but bulls are still willing to add on dips.
Support levels: 1.2200 1.2165 1.2130
Resistance levels: 1.2280 1.2320 1.2350
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.
