EUR/USD - Indecision ahead of the IFO data, will it retake the rising trend line?

The pull back in the EUR/USD ran out of steam last week around 1.1124 (23.6% Fib R of Apr 10 low - June 14 high). The spot recovered losses to end on a flat note (at 1.1192) for the second consecutive week.

Consecutive Doji candles on the weekly chart

The back-to-back Doji candles on the weekly chart suggests indecision, especially on the part of the bears, given the repeated recovery from the 23.6% Fib support despite the bearish RSI divergence and the breach of the trend line sloping higher from the April 17 low and May 11 low. The trend line hurdle is seen today around 1.1260 levels.

Focus on the German IFO data & US Durable goods orders number

A better-than-expected IFO reading could yield a rally to the trend line hurdle of 1.1260. However, further gains depend on the quality of the US durable goods orders data.

Corporate spending as represented by the durable goods orders needs to pick up, else the market would start questioning the Fed’s belief that the Q1 slowdown was transitory.  A daily close above the trend line looks likely if the core durable goods number disappoints market expectations.  The trend line hurdle may remain intact if the US May durable goods orders see a sharp rebound. 

EUR/USD Technicals

Last week’s long legged Doji candle suggests that the rebound in the daily RSI from 50.00 levels does suggest a potential for a re-test of the recent highs around 1.13.

A break below 1.1174 (1-hour 200-MA + 4-hour 50-MA) could yield an intraday pull back to 1.1154 (4-hour 200-MA) and 1.1145 (Friday’s low). On the higher side, a break above 1.12 (zero levels) would open up upside towards 1.1268 (May 23 high) and 1.1285 (June 2 high).

On a larger scheme of things, we keep an eye on 1.1296 (June 2^nd week - Doji candle’s high) and 1.1119 (last week’s Doji candle low) as major resistance and support levels.