Potential breakout of the descending channel for EUR/USD

EUR/USD ANALYSIS TOPICS OF CONVERSATION

• US jobs data is unlikely to deter Fed officials.
• EUR/USD the weekly long upper wick is a concern euro bulls

EURO FUNDAMENTAL BACKGROUND

The euro is growing steadily against the USD in the last few weeks, when the odds against They fedsupported by US economic data and also weaker natural gas prices. The EUR focus this week will be tomorrow ECB meetings to announce them interest rate. Money markets are currently priced in 75 bps raising the rate from approx 93% a certainty that in isolation may see no discernible shift EUR/USD but the post-announcement press conference will hold the key to the short-term directional bias. Any hawkish bias that accompanies this decision may retest parity.

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ECB interest rate PROBABILITY

Source: Refinitiv

The economic calendar today is dominated by US housing data (see economic calendar below), which may not be much of a market changer, but could provide additional support for a less aggressive Fed if the housing market shows signs of weakening.

EURO/USD ECONOMIC CALENDAR

Source: DailyFX Economic Calendar

TECHNICAL ANALYSIS

EUR/USD WEEKLY CHART

I prepared the diagram Warren VenketasIG

The weekly chart above shows that the bulls are now looking to break through the long-term descending channel

EUR/USD DAILY CHART

I prepared the diagram Warren VenketasIG

Every day price action this week saw another bearish rejection at the medium-term trend line (black), which coincides with psychological parity level. Since then, the euro has fallen lower 0.9854 December 2002 fluctuate low while Relative Strength Index (RSI) repeats the short-term fundamental uncertainty (NFP) at the moment.

Resistance levels:

• 1.0000
• 50-day EMA (blue)
• 0.9854/20-day EMA (purple)

Support levels:

• 0.9685
• 0.9601 (minimum of fluctuations in September 2002)
• 0.9500

IG CUSTOMER DATA: BULL

The IGCS shows that retailers are currently SHORT on EUR/USDwith 54% traders who are currently short positions (at the time of writing). At DailyFX, we typically take a contrarian view of crowd sentiment, which results in a short-term bias to the upside.

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