EURUSD – Euro Opens Lower Against the US Dollar

EURUSD – Euro Opens Lower Against the US Dollar

Key Highlights            

  • The Euro continued to move lower against the US Dollar and opened with a bearish tone this week.
  • The EURUSD pair almost tested the 1.0820-00 support area where it is currently finding bids.
  • A major support trend line on the hourly chart was broken by sellers.
  • Chinese Caixin China Services PMI, released by Markit Economics posted a decline from the last reading of 48.6 to 48.2 in December 2015, whereas the market was expecting an increase to 49.0.

EURUSD Technical Analysis

The EURUSD pair moved lower earlier today and created a new low of 1.0826 during the start of the year. Earlier, the pair broke a critical support trend line on the hourly chart, which ignited a downside move.

EURUSD

The pair is now placed below the 100 and 200 hourly simple moving averages, which means the chance of it losing ground further is high.

However, it looks like buyers are putting up a fight near the 1.0820 support area and there is a possibility of a correction moving ahead may be towards the 50% Fib retracement level of the last drop from the 1.0942 high to 1.0826 low. The hourly RSI is moving away from the oversold levels, which is a positive sign for bulls and might encourage them to take the pair higher.

Chinese Caixin China Services PMI

Earlier during the Asian session, the Caixin China Services PMI, which is based on data compiled from monthly replies to questionnaires sent to purchasing executives was released by Markit Economics. The forecast was lined up for an increase from the last reading of 48.6 to 49.0 in December 2015. However, the outcome was lower compared with the forecast, as there was a decline to 48.2.

The report stated that “A renewed contraction of manufacturing output weighed on the headline index reading in December. Although the rate of reduction was modest overall, it was the seventh time in the past eight months that production has fallen, and contrasted with a stabilisation in November“.

The outcome dented the risk sentiment and pushed the Euro down. However, it looks like the EURUSD pair is forming a nice bullish candle pattern around the lows that may take the pair higher in the near term.



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