What a start of the year we had. Following Year's End holidays with markets volumes reduced to their minimum expression, China rocked the financial world, with further signs of economic slowdown triggering risk-aversion rallies and a wild sell-off in socks worldwide. Save havens gold, JPY and CHF surged, whilst the common currency also benefited, rising as local shares plunged, and favored by its newly acquired condition of funding currency.
Adding to China, was the Middle East with an escalating conflict between Saudi Arabia and Iran after the execution of a prominent Shi'ite cleric, suspected of terrorism.
In fact, such woes were more relevant than US Nonfarm Payrolls this time, as the release of surprisingly positive news have barely affected the forex board. The US managed to add 292K new jobs in December, while the unemployment rate remained steady at 5%, indeed good news. Wages were a miss and the main reason why the greenback couldn't rally.
View the Live chart of the EUR/USD
As for the EUR/USD pair, it has held to its lately soft bullish tone, despite trading within a familiar range. Early in the week, the pair fell down to 1.0710, meeting buying interest around the 61.8% retracement of its December rally, from where it recovered around 200 pips, in line with the ongoing positive sentiment towards the common currency. The weekly chart however, shows that the price is well below a bearish 20 SMA while the technical indicators head nowhere below their mid-lines. In the daily chart, the price is struggling t o close the week above the 20 DMA, but the technical indicators turned lower around their mid-lines, lacking a clear directional strength. In this last time frame, the price remains below the 100 and 200 DMAs, both with bearish slopes.
Some steady gains above 1.0930, the immediate Fibonacci resistance and the first line of selling, should lead to an advance up to 1.1050/60, while beyond this last the next bullish target comes at 1.1120 for this week.
1.0840 is the immediate short term support, although it would take some downward acceleration below 1.0780 to confirm a bearish breakout down to the mentioned weekly low, ahead of the 1.0500 region.
Latest updates on the EUR/USD Forecast
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