A sentiment-driven market has left the EUR/USD pair at fresh weekly highs this Friday, as the common currency benefited by its condition on funding currency. The EUR/USD pair, however, is still unable to rally beyond the 1.1000 figure, as broad dollar strength has maintain the rally limited.
Risk aversion surged following oil prices that tumbled below $30.00 a barrel for the first time in over 12 years, with Brent crude for March delivery down 3.6% to $29.76 an WTI futures trading down over 5% at $29.45 by London's close. Chinese shares plummeted, and the rest of the world followed, with US indexes reaching fresh 5-month low.
View the Live chart of the EUR/USD
The common currency advanced anyway, but as commented above, the rally was quite limited. Trapped between a rock and a hard place, the pair lacks directional conviction at the time being, although the upside is favored, given that the pair extended further its recovery from a major support reached early January, the 61.8% retracement of the December bullish run at 1.0715- The daily chart shows that the price is above a flat 20 SMA, but so far capped by the 100 SMA, while the technical indicators aim higher around their mid-lines.
In the weekly chart however, the outlook is still bearish, with the technical indicators heading south below their mid-lines and the price below the 20 SMA. The pair has a strong support for this upcoming week at 1.0845, but a stronger one around 1.0790/800, where buyers have surged on dips. It would take a break below this last to confirm a bearish continuation towards the mentioned 1.0710 price zone.
The level to watch towards the upside is 1.1000 as above it, the rally can overcome December's high at 1.1059, and extend up to 1.1120 a major resistance which, if broken, should lead to a firmer advance up to 1.1240.
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