EUR/USD Daily Fundamental Analysis
The currency pair EUR/USD extended its loss at the starting day of the week. From its previous trading session, it has declined about -0.10% today. The rising Sino-US geopolitical tensions weighed heavily on riskier currencies like EUR, despite stronger than anticipated German Factory Orders.
The December Factory Orders from Germany rose by 3.2% against the forecasted 2.1% and helped shared currency gain strength in the market. The improved industrial position of the largest Eurozone economy suggested that it could get through the winter without seeing a dramatic slump.
Meanwhile, the Retail Sales data for December from Eurozone dropped to -2.7% against the anticipated -2.4%. It showed that consumers are still spending less due to inflationary levels in the region. However, ECB already cut interest rates last Thursday and has said that there will be a need for more cuts in the coming months to tame inflation.
On the other hand, the US dollar Index was gaining strength on Monday with +0.20% at 103.12. The greenback was taking bets amid the rising geopolitical tensions between US and China after an alleged Spy balloon from China was spotted. According to many analysts, the relations between the US and China looked very fragile, which increased the safe-haven sentiment in the market and pushed greenback prices higher.
EUR/USD Technical Analysis
The H4 Chart of the forex pair EUR/USD shows that it is hovering around a critical level. The pair is standing at the 200-Day Simple Moving Average line (brown line) at the 1.0755 level. This level is the immediate support (S1) for the pair, holding it from further losses. Any break below this level could drag the prices towards the second support level (S2) at 1.0657. This psychological level is what traders are currently keeping an eye on. It is because any break below this level would definitely mean a massive bearish pressure.
In the bullish scenario, the pair will see its first resistance at 1.08637, which is the same level where 100-Day Simple Moving Average (blue) line stands. Any break above this level could push its prices towards the supply zone of 1.09339 and above.
The technical indicators, including RSI near the 100 level, suggests that the price can reverse any time soon. At the same time, the Stochastic Oscillator is the oversold region with an upward-pointing signal line that also gives reversal signs. There are more chances that the price will rebound in the short term. However, any negative news about the global economy or geopolitical tensions could trigger massive bearish pressure. Therefore, the idea is to wait for the price to break below the 1.06567 level before opening a short position.
Daily Technical Levels
Pivot Point: 1.0790