EUR/USD tames again 1.0500 handle; Is the Trump Trade over?

Jose Ricaurte Jaen Analista independiente

Currently, EUR/USD is trading at 1.0576, up +0.25% on the day, having posted a daily high at 1.0622 and low at 1.0450.

The Single Currency parity fades; at least in the short-term

Over the last six-consecutive weeks, EUR/USD traded under a severe bearish bias due to well-known fundamental variables affecting the once booming European Union. Today, Trump's pre-inauguration broadcast turned out not so intense nor US dollar supportive. Moreover, the President-Elect only had time to repeat the same old boring single that he knows to play well. The hacking incidents, that wall in Mexico, the Buzzfeed leaked article and how he received an offer for his business that he was not going to accept.

A speech that lack substance was good enough to allow a massive counterattack against the greenback; guess who took advantage of it? Market sentiment changed on the spot and the avalanche of traders and investors adjusting positions turned on multiple long positions to favor the euro that recovered more than 120 pips in the process.

In the end, what matter the most? Although Euro versus US dollar parity was the hottest topic heading to the holidays, those notes are fading at least in the short-term.

On Thursday, the economic docket sees the ECB Monetary Policy Meeting Accounts, but unless Trump is back on television or twitter with some tangible actions to boost the dollar; euro bulls are in control for now.

EUR/USD Technical Levels

To the upside, there are some limitations as far as how high the single currency may move from this point. However, following the ascendant channel from Dec. 2016, a series of higher lows, now on the 1.0450 handle, support a strong case to experience a continuation towards 1.0700, only if prices can break the 1.0600/20 area.

On the medium-term view, 1.0640 (short-term 38.2% Fib) clocks as the most relevant resistance. A close and open above this level would open all doors to target 1.0970 (short-term 50.0% Fib)

EUR/USD analysis: Trump's presser spurs more uncertainty, dollar pays the price

Author

Jose Ricaurte Jaen

Analista independiente

Born in Colón (Panamá). Over the last years, he has been designing currency algorithms for the retail industry.

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