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#1 21-01-2020 17:46:47

Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2713

EUR/USD: the ZEW index is not favouring a euro rebound

EUR/USD: the ZEW index - clearly above expectations - is not favouring a euro rebound, pressure remains bearish

The EUR/USD maintains a negative profile on Tuesday, after having accentuated its decline on Monday, after it had already lost a lot of ground last Thursday and Friday.

Indeed, the pair hit a low of 1.1075 on Monday, the lowest since 24 December, against an almost empty economic calendar, as the only important statistic of the day was the German PPI. The statistic proved to be disappointing, which wasn't enough to explain the drop, but was a negative factor nonetheless.

On Tuesday morning, investors were able to see the ZEW German Business Climate index for last month, which turned out to be much better than expected. The indicator rose to 26.6 points, compared to 16 expected and 10.6 previously.

However, the eurodollar's bullish reaction to this positive surprise proved to be very limited, as the pair proved unable to break above the psychological threshold of 1.11. The pair's bullish reaction to this positive surprise proved to be very limited.

The reason for this lack of reaction can be explained by the prospect of Thursday's ECB meeting, which is a risk although no decision is anticipated.

From a technical point of view, it should be noted that the psychological threshold of 1.11 is a short-term resistance level.

Looking back, we can see in daily data that the EUR/USD pair is between its 100 and 200 day moving averages (1.1060-1.1135).

If the pair breaks below the 100-day moving average, a further decline towards a test of the major psychological threshold of 1.10 is a possibility.

If the EUR manages to break above the 200-day moving average, the first bullish target will be the psychological threshold of 1.12. 

Currently, the EUR/USD pair is trading around 1.1091 on the forex.

Daily EUR/USD chart

"Anything worth having is worth going for - all the way." - J.R. Ewing



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