EUR/USD Consolidates after Euro PMI Data – US PMI on Focus
EUR/USD broke its 4-day bullish streak on Tuesday as it failed to hold on to the previous day’s gains. On Monday, the pair crossed the 1.0900 threshold and reached the 1.09267 level, its highest price in 41 weeks. However, right after this, the currency pair experienced selling pressure and lost half of its daily gains. The technical outlook of EUR/USD shows that if the pair managed to break and maintain the 1.08900 level, it could push the prices towards fresh new heights. The mixed PMI data from European economies capped the gains brought in by the improved risk sentiment. Furthermore, the mixed comments from ECB officials also weighed down the pair.
EUR/USD Fundamental Analysis
On one side, where ECB President Christine Lagarde was assuring to keep interest rates hikes on a steady pace, Yannis Stournaras, a Governing Council member, believed that interest rate adjustments should be made gradually amid the economic slowdown in Eurozone.
On Tuesday, the German GfK Consumer Climate fell short of the market expectation of -33.2 and was reported as -33.9, weighing on EUR. While the French Manufacturing PMI came in green with a 50.8 reading against S&P Global’s forecasted 49.6 reading, the French Sales PMI fell short of the expected 49.7 and came in at 49.2. Similarly, the German Manufacturing PMI was negative at 47.0 and German Services PMI was positive at 50.4 in January. The mixed data from Eurozone make it hard for EUR/USD to keep its bullish momentum for the 5th day in a row.
Meanwhile, the US Dollar Index (DXY) was also rising with +0.02% gains in a day at 102.16. The greenback was gaining strength at the beginning of the American Session amid the hopes for the positive release of PMI data. The Flash Services PMI data is anticipated as 45.3, and the Flash Manufacturing PMI in January is forecasted as 46.0. Furthermore, the Richmond Manufacturing Index is also due to release on Tuesday, which would also have an impact on EUR/USD prices later in the American Trading session.
EUR/USD Technical Analysis
After declining continuously in the early trading hours of Tuesday, EUR/USD pulled back at the end of the European Session. However, it is still trading within the lower part of the ascending regression channel that started in the initial days of January.
The immediate support is standing at 20-Day Simple Moving Average (Red line) at the 1.0852 level. On the downside, if the pair drops, the initial support is provided by the lower limit of the ascending channel and the 50-Day SMA 9Blue line at 1.0831. Any break below this level would mean a higher interest from sellers. It would extend further downward momentum towards the next support level of 1.0800.
On the other side, buyers could also take control and push the pair higher. However, they will face immediate resistance at the 1.08908 level (the medium limit of the ascending channel). If EUR/USD pair manages to hold this level, it could trigger a fresh bullish momentum. The next resistance will be at the upper limit of the ascending channel at 1.09286.
EUR/USD Daily Technical Levels
Pivot Point: 1.0880