The long-termed growth of EUR against USD reversed into downward correctional movement due to the strengthening of the US currency. Favorable fundamental background became a catalyst to the investors’ interest in USD, so the pair began to fall. In addition, in the end of the last week in the USA were published strong employment market data and key indices.
This week the pair was trading within the narrow sideways channel due to the mixed Eurozone and USA statistics: in Germany the negative Industrial Production data were published, but strong indices releases can balance the situation.
Today the USA inflation pressure data are worth traders’ attention.
Support and resistance
In the short term period the growth of the investors’ demand on the oversold USD against the favorable US statistics is expected, so the pair will continue to fall. The situation will unlikely last for long, as the pair stays in the wide upward trend, so the lower border of the channel at the level of 1.1600 can become the reversal point and the beginning of the formation of the new long term upward wave. The head of the Central Bank Mario Draghi in his recent commentaries noted the high rate of the economy restoration, but warned against the soon and unwanted tightening of the monetary policy.
Technical indicators confirm the deep correction forecast: MACD short positions volumes are growing, Bollinger Bands have reversed and are pointing downwards.
Support levels: 1.1730, 1.1650, 1.1600, 1.1575, 1.1500, 1.1430, 1.1370.
Resistance levels: 1.1800, 1.1860, 1.1900, 1.1950, 1.2030.
In the short term short positions will become relevant with the target at 1.1600. Stop loss is 1.1820.
In the larger perspective the pair stays within the upward trend. Long positions can be opened from the key support levels and lower border of the range (1.1600).