- EUR/USD created a doji candle yesterday, pausing the rally from the recent lows below 1.1250. As a result, today's close is pivotal.
- The pair could revisit the key resistance of 1.1407 if the German employment and Eurozone CPI numbers better estimates.
EUR/USD created a doji candle with long upper shadow on Thursday, signaling strong indecision in the market place.
The common currency picked up a bid in Europe and jumped to a high of 1.1420, as the German 10-year bond yield hit three-week highs near 20 basis points, after the Eurozone’s biggest economy suggested a pick up in inflation.
The move above 1.14, however, was short-lived with the dollar rising across the board after the US fourth-quarter annualized GDP came in at 2.6 percent, beating the consensus estimate of 1.9 percent by a big margin.
The dollar demand pushed EUR/USD all the way back to its opening rate of 1.1370.
The flat close with a long upper shadow has weakened the immediate bullish case. After all, that was the third straight failure to beat the 1.1407 (61.8 percent Fibonacci retracement of 1.1514/1.1234).
That said, the 5- and 10-day moving averages (MAs) are still trending north, indicating a bullish setup. Further, the rising wedge breakdown on the 10-year US-German yield spread, confirmed earlier this week, is still valid
So, a re-test of 1.1407 cannot be ruled out, especially if the German jobs data, due at 08:55 GMT and the Eurozone preliminary CPI number, scheduled for release at 10:00 GMT, beat estimates by a big margin.
The bullish case, however, would strengthen only if the pair closes today above 1.1407. The breakout will likely elusive if the US personal spending, due at 13:30 GMT, betters estimates, lifting treasury yields higher.
On the downside, traders need to keep an eye on 1.1359 (low of yesterday's doji). A close below that level would imply an end of the rally from the Feb. 15 low of 1.1234. As of writing, EUR/USD is trading largely unchanged on the day at 1.1370.
EUR/USD Technical Levels
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