EUR/USD Could Rally If It Breaks 1.142004 March, 2019 by Aayush Jindal in Market Analysis
- The Euro recovered recently and traded above the 1.1325 resistance against the US Dollar.
- A crucial bearish trend line is formed with resistance near 1.1408 on the 4-hours chart of EUR/USD.
- The US ISM Manufacturing Index declined from 56.6 to 54.2 in Feb 2019.
- The Euro Zone PPI for Feb 2019 will be released today, which could increase 0.4% (MoM).
EURUSD Technical Analysis
After trading as low as 1.1234, the Euro started a solid rebound against the US Dollar. The EUR/USD pair broke the 1.1280 and 1.1325 resistance levels to move into a short term bullish zone.
Looking at the 4-hours chart, the pair gained bullish momentum after it broke the 1.1325 resistance and the 100 (red) simple moving average (4-hours). There was also a break above the 50% Fib retracement level of the last decline from the 1.1514 high to 1.1234 low.
However, the upward move was capped by the key 1.1420 resistance area and the 61.8% Fib retracement level of the last decline from the 1.1514 high to 1.1234 low. Besides, there is crucial bearish trend line formed with resistance near 1.1408 on the same chart.
The pair made two attempts to clear the 1.1410-1.1420 resistance area, but it failed. It is currently consolidating below 1.1420, with support at 1.1340 and 1.1325. Should there be a downside break below 1.1325, the pair could start a fresh bearish wave.
On the other hand, a successful break above the 1.1420 resistance area may perhaps open the doors for a sustained upward move towards the 1.1450 and 1.1500 resistance levels.
Fundamentally, the US ISM Manufacturing Index for Feb 2018 was released this past Friday. The market was looking for a minor decline from the last reading of 56.6 to 55.5.
The result was lower than the forecast the US ISM Manufacturing Index declined from 56.6 to 54.2. Besides, the New Orders Index declined 2.7 percentage and registered 55.5 percent.
The report added that:
The Production Index registered 54.8 percent, 5.7-percentage point decrease compared to the January reading of 60.5 percent. The Employment Index registered 52.3 percent, a decrease of 3.2 percentage points from the January reading of 55.5 percent.
Overall, EUR/USD is facing a tough resistance at 1.1420 and it won’t be easy for buyers to gain bullish momentum in the near term.
Economic Releases to Watch Today
- UK’s Construction PMI for Feb 2019 – Forecast 50.2, versus 50.6 previous.
- Euro Zone PPI for Feb 2019 (YoY) – Forecast +3.4%, versus +3.0% previous.
- Euro Zone PPI for Feb 2019 (MoM) – Forecast +0.4%, versus -0.8% previous.