The EUR/USD pair recovered from the low of 1.0957 to trade above 1.10 levels on Wednesday as slid in oil prices pushed US equities lower and triggered carry unwind. But, further gains were capped following the oil-led recovery in stock markets. Asian equities traded mixed, while European equities rallied today, thereby restricting the gains in the pair at 1.1039 levels.
Consequently, a horribly weak data (and drop in equities) could help EUR/USD pair move above its 200-DMA at 1.1047. The US equities are pointing to a positive open and a strong data would only add to the bullish tone in equities and send EUR/USD lower to 100-DMA at 1.0955.
_20160225101753.png "EURUSD H1 chart")
US durable goods data needs to influence equities
The Fed rate hike bets are more sensitive to the financial market volatility and US labor market performance. Hence, the traders may overlook US durable goods data due later today. Moreover, the data needs to affect the US equities in order to see action in the EUR/USD pair. The EUR is more sensitive to equity market moves ever since it took up the role of a funding currency (ECB moved to negative territory).Consequently, a horribly weak data (and drop in equities) could help EUR/USD pair move above its 200-DMA at 1.1047. The US equities are pointing to a positive open and a strong data would only add to the bullish tone in equities and send EUR/USD lower to 100-DMA at 1.0955.
Technicals – Bullish price-RSI divergence on hourly chart
- The hourly chart shows a bullish price-RSI divergence; hence the spot appears poised to revisit 200-DMA at 1.1047 unless the pair falls below 1.0990.
- A break above 200-DMA would expose 1.1088-1.11 levels.
- On the other hand, a daily close below 1.0955 (100-DMA) would mean the continuation of the downtrend that began from the high of 1.1714 (Aug 2015 high).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.