EUR/USD: Corrective rally stalls on weak data, conflicting signals on the charts

  • EUR/USD corrective rally seems to have run out of steam above 1.18.
  • Weak German and French data may have tapered the ECB QE taper talk.
  • Trade fears could hurt both USD and EUR, the focus remains on yield differential.
  • Technical charts show conflicting signals.

The EUR/USD created an inverted bearish hammer on Thursday and a bearish hammer on Friday, signaling the corrective rally from the recent low of 1.1510 has run out of steam in the 1.1840 neighborhood.

The bullish exhaustion could be associated with downside economic surprises from Germany and France (dismal industrial output numbers) and the resulting fear that the ECB will refrain from discussing QE taper at its July meeting.

Trade tensions to put more focus on yield differential

The G7 disaster and the heightened trade tensions could force the Fed to adopt a slower rate hike path and complicate ECB's QE taper plans. So, both EUR and USD are at risk. That said, the USD could still find bids, given the rate differential favors the greenback.  

Conflicting signals on the charts

The back-to-back hammer candles on the daily chart signal the corrective rally has stalled. Further, the 50-day moving average has crossed the 200-day moving average in an EUR-negative manner.

However, the weekly chart paints a bullish story. Last week's positive price action has confirmed a bullish doji reversal. Also, the 100-week moving average has crossed the 200-week moving average in an EUR-positive manner.

EUR/USD Technical Levels

Resistance: 1.18 (psychological hurdle), 1.1822 (May 9 low), and 1.1855 (38.2% Fib R of Apr-May sell-off).

Support: 1.1769 (5-day moving average), 1.1727 (June 8 low), and 1.1709 (10-day moving average).


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.

Feed news

Latest Forex News

Latest Forex News

Editors’ Picks

EUR/USD treads water around 1.1600 after US data

EUR/USD continues to fluctuate in its daily range around 1.1600 as the latest data releases from the US failed to trigger a meaningful market reaction. New Home Sales in the US surged by 14% in September and consumer confidence sentiment in October.


GBP/USD spikes to three-day tops above 1.3800

GBP/USD surged past the 1.3800 mark during the first half of the European session and shot to three-day tops on the back of upbeat UK data. Investors now await macroeconomic data releases from the US and the next phase of Brexit negotiations.  


XAU/USD slides further below $1,800 mark, downside seems limited

The risk-on mood prompted fresh selling around the safe-haven gold on Tuesday. Hawkish Fed expectations further exerted pressure on the non-yielding XAU/USD. Fresh COVID-19 jitters, worries about global economic growth helped limit losses.

Gold News

Three reasons why MATIC price will breakout to a new all-time high at $4.5

MATIC price is breaking out of an ascending triangle pattern, hinting at a 150% ascent. Transactional data shows barely any resistance level ahead for Polygon, suggesting a swift move higher. The Layer 2 solution has been at the center of DeFi evolution.

Read more

AMC entertainment gains as meme stock rally continues from previous week

NYSE:AMC gained 0.63% during Monday’s trading session. Meme stocks rally on Monday as momentum carries over from the previous week. AMC CEO Adam Aron hints that the company could be getting into the cryptocurrency business.

Read more