Key Highlights
- The Euro declined heavily, tested the 1.1300 support, and later recovered against the US Dollar.
- There was a break above a connecting bearish trend line with resistance at 1.1380 on the 4-hours chart of EUR/USD.
- The German IFO business sentiment index in Jan 2019 declined from 101.0 to 99.1.
- Today in the US, the Dallas Fed National Activity Index for Jan 2019 will be released, which could decline from 0.22 to 0.21.
EURUSD Technical Analysis
This past week, the Euro was under a lot of pressure as it declined below the 1.1420 support level against the US Dollar. The EUR/USD pair even broke the 1.1350 and 1.1320 support levels.
Looking at the 4-hours chart, the pair dipped below the 1.1300 support and formed a new yearly low at 1.1289. Later, there was a strong buying interest emerged near the 1.1300 level, resulting in a decent upward move.
The pair bounced back above 1.1350 and broke the 38.2% Fib retracement level of the last decline from the 1.1569 high to 1.1289 low. Moreover, there was a break above a connecting bearish trend line with resistance at 1.1380.
The pair tested the 1.1420 resistance (the previous support) and the 100 simple moving average (red, 4-hours). Besides, the 50% Fib retracement level of the last decline from the 1.1569 high to 1.1289 low is at 1.1429.
Therefore, a clear break above the 1.1420-1.1430 area is must for further upsides this week. If not, there could be a fresh decline towards the 1.1350 support. More importantly, if sellers take back control, the pair may slide towards the 1.1320 or 1.1300 support.
Fundamentally, the German IFO business sentiment index for Jan 2019 was released by the CESifo Group. The market was looking for a decline from the last reading of 101.0 to 100.6.
The actual result was lower than the forecast as there was a decline to 99.1 in the German IFO business sentiment index. Additionally, the IFO Current Assessment declined from the last revised reading of 104.9 to 104.3. The report added:
Companies assessed their current business situation slightly less favourably. Their business expectations also deteriorated sharply and turned pessimistic for the first time since December 2012. The German economy is experiencing a downturn.
Overall, the 1.1420-1.1430 resistance area is crucial for EUR/USD. If there is a successful break and close above 1.1430, the pair may recover further in the coming sessions.
Economic Releases to Watch Today
- Euro Zone Private loans (YoY) Dec 2018 – Forecast +3.4%, versus 3.3% previous.
- Dallas Fed National Activity Index for Jan 2019 – Forecast 0.21, versus 0.22 previous.
