EUR/USD: Hovers near 1.2150, Thursday's candle suggests scope for minor pullback
EUR/USD is trading near 1.2150 in Asia, representing a more than 1.5% gain for the week. While the pair ticked higher for the third straight day on Thursday, it created a candle with a long upper wick validating the above-70 or overbought signal on the 14-day RSI.
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EUR/USD is trading near 1.2150 in Asia, representing a more than 1.5% gain for the week. While the pair ticked higher for the third straight day on Thursday, it created a candle with a long upper wick – a sign of uptrend fatigue – validating the above-70 or overbought signal on the 14-day Relative Strength Index.
As such, a pullback to the ascending 5- day Simple Moving Average (SMA), currently located at 1.2078, could be in the offing. A violation there would expose the 10-day SMA at 1.991. A close below 1.20 would weaken the immediate bullish case. On the higher side, resistance is seen at 1.2175 (Thursday's high) and 1.22 (psychological level).
US data was mixed, although employment-related figures were quite encouraging, boosting Wall Street. The Initial Jobless Claims for the week ended November 27 improved to 712K, beating expectations. Challenger Job Cuts printed at 64.797K in November, better than the previous 80.666K. The ISM Services PMI, however, contracted to 55.9 in November from 56.6 in the previous month.
The EU published October Retail Sales, which were upbeat, surging 1.5% MoM and 4.3% YoY. Markit published the final November Services PMIs, with the EU index revised to the upside and the US one confirmed at 58.4. Market players kept looking beyond data, focusing on vaccine hopes and US stimulus chatter.
Germany will release October Factory Orders this Friday, while the US will publish the November Nonfarm Payrolls. The country is expected to have added 481K new positions in the month, below the previous 638K. The unemployment rate, however, is seen improving from 6.9% to 6.8%.
SPECIAL WEEKLY FORECAST
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The EUR/USD pair reached 1.1945 this week, a fresh 2-month high, retaining most of its gains heading into the weekend. The dollar got no love from speculative interest, while the shared currency advanced despite some tepid macroeconomic figures.