EUR/USD had a choppy week amid market mood swings. What’s next? Apart from Trump’s tariffs and Brexit, the PMI data stand out. Here is an outlook for the highlights of this week and an updated technical analysis for EUR/USD.
The European Central Bank left its policy unchanged and President Mario Draghi surprised with an upbeat tone. The ECB did not downgrade inflation forecasts. Together with a long-awaited rate hike from Turkey, the euro advanced. Mostly optimistic headlines about Brexit carried the euro higher alongside the pound. A deal seems more realistic now, as Chief EU Negotiator Michel Barnier says. The German ZEW figure came out better than expected. US inflation missed expectations but retail sales were OK and consumer sentiment surprised to the upside.
EUR/USD daily chart with support and resistance lines on it. Click to enlarge:
* All times are GMT
EUR/USD Technical Analysis
Euro/dollar moved up and then down, retreating from the 1.1650 level mentioned last week before surging to higher ground.
Technical lines from top to bottom:
1.1850 was the peak on June 14th, before Draghi sent the euro down. 1.1795 was a swing high back in July.
1.1750 held the pair no less than four times in July and remains a powerful level.
1.1720 is a veteran line that worked in both directions and it capped the pair in mid-September. 1.1650 was a swing low in late August and is very closely followed by 1.1630 which held the price down in mid-August.
1.1580 worked as support in late August. 1.1530 supported the pair twice in August, making it an important line. 1.1435 held the EUR/USD down when it was trading around the yearly lows.
1.1300 is a round number that held the pair in mid-August and also held the pair down in June 2017.
I remain bearish on EUR/USD
While the ECB was relatively relaxed, the Fed is on course to raise rates and to enter tight monetary policy. Monetary policy divergence and a potential comeback of trade wars could push the pair down.
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