- US official manufacturing PMI and FOMC Minutes up next.
- EUR/USD still headed to test the critical 1.2100 resistance level.
A scarce macroeconomic calendar in Asia kept majors within well-limited ranges overnight, with the EUR/USD pair retreating some 40 pips, to trade as low as 1.2030 early Europe, anyway bullish. The macroeconomic calendar has little to offer in the current session, with Germany just releasing its December unemployment data. The unemployment rate in the country fell to 5.5%, a new record low, while the number of unemployed people decreased by more than expected.
The US calendar will be busier today, with multiple minor reports ahead of the December ISM manufacturing PMI and FOMC Meeting Minutes. Fed's latest monetary policy announcement triggered the ongoing negative sentiment towards the greenback, as despite rising rates for a third time in the year, speculative interest seen it as dovish, as policymakers were unable to explain subdued inflation. Therefore, there's little this document can do to change such sentiment, moreover considering that Janet Yellen is going to be replaced by Jerome Powell as Fed's head starting February. That means the market will pay even less attention to whatever the current leader has to say about future policies. If something, the Minutes will remind investors why they are selling the greenback, and probably fuel the decline.
The 4 hours chart for the pair shows that technical indicators are currently correcting extreme overbought conditions, heading lower but still far above their mid-lines, while the 20 SMA maintains its bullish slope below the current level, around 1.2000, indicating that the latest retracement has more to do with profit-taking than with selling interest, still limited around the pair.
There's an immediate short-term resistance around 1.2065, followed by the 1.2100 figure. Beyond this last, the bullish trend is set to gain additional momentum with scope then to advance up to 1.2260 during the following sessions. Below 1.2000, the downward corrective movement can extend to 1.1960, where buying interest will likely re-surge.
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