EUR/USD - Top in Place after Trump's Davos speech?
- EUR creates bearish pinbar after Trump's "strong dollar" comment.
- Focus on US data - GDP and durable goods orders.
EUR/USD formed a bearish pinbar candle yesterday as Trump's strong dollar comment gave a much-needed boost to the greenback. The currency pair fell to 1.2364 in late NY session before rising to 1.2430 levels in Asia.
The bearish pinbar if followed by a negative price action today would add credence to the overbought conditions as shown by the RSI and indicate a short-term top is in place at 1.2538.
That said, only a strong US GDP and the durable goods figure could yield a negative follow-through to yesterday's bearish pinbar candle. This is because Trump's pro-USD comments have already been shrugged off by Asian desks (as indicated by a rise in EUR/USD in Asia).
Further, ECB President Draghi's focus on GDP and relatively mild emphasis on the strong EUR is being read by investors as a sign the central bank is comfortable with the EUR's ascent. Hence, only a strong US Q4 and Dec durable goods orders figure could weigh over the EUR/USD pair.
Kathy Lien from BK Asset Management writes, " We are looking for (US) growth to slow as trade and retail sales activity weakened towards the end of the year." EUR/USD could revisit previous day's high of 1.2538 if the US data shows a sharp slowdown in the economic activity.
EUR/USD Technical Levels
As of writing, the spot is trading at 1.2425 levels. A move above 1.2432 (monthly 200-MA) could see the pair test supply around 1.25 (zero levels) and 1.2538 (previous day's high). On the other hand, a break below 1.2399 (1-hour 50-MA) could yield a pullback to 1.2329 (1-hour 100-MA) and 1.2284 (1-hour 200-MA)
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
