EUR/USD Current price: 1.2428
- EUR/USD bullish potential to remain strong as long as buyers defend the 1.2360 level.
- US Core PCE inflation, Fed's favorite inflation measure, to open the macroeconomic week.
The EUR/USD pair settled at 1.2428 last Friday, its sixth consecutive week moving upwards, as distrust in the greenback continues being the main theme across the forex board. The pair soared mid-week to 1.2536, its highest since December 2014 in a combination of a desperate ECB and comments from US Treasury Secretary Mnuchin, the first, failing to convince the market that policymakers are not concerned on the exchange rate, but rather on inflation, and the second stating that a weaker USD would be positive for the US economy. The American currency enjoyed some sudden but short-lived demand on Thursday, on comments coming from US President Trump, saying that the dollar will be "stronger and stronger," but a disappointing Q4 GDP reading released at the end of the week, halted dollar's advance. US first estimate of Q4 GDP was 2.6%, missing market's expectations of 3.0% and below the previous quarter´s final reading of 3.2%, although the decrease was a result of increased imports amid a stronger pace of consumer spending. Durable Goods Orders increased by the most in six months in December, up 2.9% vs. the expected 0.8%, but failed the boost the greenback, undermined by political contradictions.
This upcoming week will start with the US personal income and spending figures, which include the PCE index, Fed's favorite inflation measure, and end with the US Nonfarm Payroll report for January, indeed granting more volatility around the pair. The EU calendar won't have much to offer until Tuesday when Germany will release its Q4 GDP and January preliminary inflation figures.
The daily chart for the pair shows that technical indicators have lost upward momentum but hold within overbought territory, while the 20 DMA continues firmly up well below the current level, and above the larger ones, all of which maintains the risk toward the upside, moreover if Thursday's low at 1.2360 attracts buying interest. Shorter term, and according to the 4 hours chart, the downside seems limited, as the intraday decline stalled above a still bullish 20 SMA, currently around 1.2400, while the RSI indicator corrected overbought conditions, to consolidate around 58. The Momentum eased in this last time frame, rather reflecting the latest decline than suggesting a downward extension ahead.
Support levels: 1.2400 1.2360 1.2320
Resistance levels: 1.2490 1.2500 1.2535
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