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EUR/USD Fails Above 1.2200, GBP/USD Trimming Gains

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Aayush Jindal

Key Highlights

  • EUR/USD topped near 1.2240 and started a fresh decline.
  • There was a break below an ascending channel with support at 1.2090 on the 4-hours chart.
  • GBP/USD trimmed gains and traded below 1.4000, whereas USD/JPY extended its rally above 106.50.
  • The US ISM Manufacturing PMI could increase from 58.7 to 58.9 in Feb 2021.

EUR/USD Technical Analysis

This past week, the Euro cleared the 1.2200 resistance zone against the US Dollar. However, EUR/USD struggled to stay in a positive zone and it started a fresh decline from the 1.2243 high.

Looking at the 4-hours chart, the pair declined below the 1.2200 and 1.2120 support levels. There was also a break below an ascending channel with support at 1.2090.

The pair traded below the 76.4% Fib retracement level of the upward move from the 1.2023 low to 1.2243 high. There was also a break below the 100 simple moving average (red, 4-hours) and the 200 simple moving average (green, 4-hours).

An immediate support on the downside is near the 1.2025 zone. The next key support is near the 1.2000 level. Any more losses might call for a test of the 1.236 Fib extension level of the upward move from the 1.2023 low to 1.2243 high at 1.1971 low.

On the upside, the previous support at 1.2120 and 1.2135 could act as a resistance. The next major resistance sits at 1.2200.

Looking at GBP/USD, the pair rallied towards the 1.4250 before declining over 200 pips. Besides, both AUD/USD and NZD/USD also reacted to the downside. Conversely, there were bullish moves in USD/JPY above 106.00 and 106.20.

Economic Releases

  • Germany’s Manufacturing PMI Feb 2021 - Forecast 60.6, versus 60.6 previous.
  • Euro Zone Manufacturing PMI Feb 2021 – Forecast 54.7, versus 57.7 previous.
  • UK Manufacturing PMI Feb 2021 – Forecast 54.9, versus 54.9 previous.
  • US Manufacturing PMI Feb 2021 – Forecast 58.6, versus 58.5 previous.
  • US ISM Manufacturing Index Feb 2021 – Forecast 58.9, versus 58.7 previous.
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