Will EUR/USD breach 50-DMA support?


The three-day losing streak in the EUR/USD pair appears to have come to a halt around the 50-DMA level of 1.0674 this Friday morning. The pair failed to hold above the 200-DMA level earlier this week.

ECB Taper/rate hike is still a distant dream…

Euro bulls got a wakeup call earlier this week after reports hit the wires earlier this week that the ECB policy makers are reluctant to make any changes to the bank’s policy statement in April and feel the markets misread the ECB’s message in March from beginning to price in a rate hike by later this year.

This triggered a sell-off in the EUR/USD pair from the high of 1.0906 to 1.0672. The EUR is likely to stay on weaker footing as the market scale back their expectations of a rate hike ahead of the April meeting.

Reflation trade revival

The US Q4 GDP was revised higher to 2.1% from the preliminary estimate of 1.9%. Meanwhile, personal spending was revised higher to 3.5% and that seems to have triggered a revival of the Trumpflation/Reflation trade.

Overall, the EUR/USD looks set to take out the 50-DMA support… especially if US personal spending due later today prints higher than expected. The 10-year treasury yield could break above 2.43% on strong data, leading to a broad based USD rally.

EUR/USD Technical Levels

A break below 1.0674 (50-DMA) would expose the downward sloping 100-DMA seen at 1.0632, under which the losses could be extended to 1.06 (zero figure). On the other hand, a break above 1.0706 (Mar 16 low) would open doors for a re-test of 1.0759 (5-DMA) and 1.0772 (10-DMA).

  TREND INDEX OB/OS INDEX VOLATILY INDEX
15M Bearish Neutral High
1H Strongly Bearish Oversold Expanding
4H Bearish Oversold Shrinking
1D Bearish Neutral Low
1W Bearish Neutral Low

 

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