EUR/USD continues to fluctuate in a narrow channel below 1.0900 on Wednesday. The data from Germany and the Euro area showed that the private sector’s economic activity continued to contract in early January, not allowing the Euro to gather recovery momentum.
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EUR/USD turned south and touched its lowest level since mid-December at 1.0820 during the American trading hours on Tuesday. Although the pair managed to recover above 1.0850 early Wednesday, the technical outlook is yet to point to a build-up of bullish momentum.
The risk-averse market atmosphere helped the US Dollar (USD) stay resilient against its rivals on Tuesday, despite the bearish action seen in the early European morning. US stock index futures trade in positive territory early Wednesday and make it difficult for the USD to gather strength.
Preliminary January Manufacturing and Services PMI surveys from Germany, the Eurozone and the US will be featured in the economic calendar on Wednesday. The private sector’s economic activity both in Germany and the Euro area is forecast to show a contraction in early January. In case PMI surveys highlight the relatively healthier state the US economy is in, EUR/USD could have a hard time gaining traction. However, an improving risk mood could cap the USD’s upside and help the pair limit its losses.
Nevertheless, investors are likely to refrain from taking large positions ahead of the European Central Bank’s (ECB) monetary policy announcements on Thursday. Moreover, the US Bureau of Economic Analysis will release its first estimate of the fourth-quarter Gross Domestic Product growth as well.
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EUR/USD corrected higher early Wednesday but is yet to climb above the 20-period Simple Moving Average (SMA) on the 4-hour chart. Additionally, the Relative Strength Index (RSI) indicator stays below 50, suggesting that the pair is struggling to gather bullish momentum. On the upside, 1.0900 (psychological level) aligns as first resistance before 1.0930 (100-period SMA, 200-period SMA) and 1.0960 (Fibonacci 23.6% retracement of the latest uptrend).
Interim support seems to have formed at 1.0830 (static level) before 1.0800 (psychological level) and 1.0780 (Fibonacci 50% retracement).
EUR/USD Daily Chart
Source: TradingView, Created by Zain Vawda
Original Article: https://www.fxstreet.com/currencies/eurusd