EUR/USD: should traders sell after Friday's surprise rally, as the pair is facing key resistance?

The eurodollar gained some serious ground at the end of last week, and retains most of its recent gains as a new week begins today.

For the record, the pair rallied in light of several factors, including the impact of the GBP/USD's rise, via the correlation effect between the two pairs. Indeed, the pound recorded a gain of over 100 pips on Britain's last day in the EU.

Particularly poor U.S. economic data, the Chicago PPMI, also weighed down on the USD, surprisingly negatively, coming in at 43.0 points for last month, down from 48.9 and 48.1 previously.

Looking ahead to today's forex economic calendar, the most important statistic will be the U.S. Manufacturing ISM for January. Economists expect it to rise to 48.6 points, after 47.1 points the previous month.

Aside from this main statistic, traders will also be watching the U.S. PMI at 15:45 GMT. Finally, a speech by ECB President Lagarde is scheduled for 19:00, right before Weidmann's (Bundesbank) speech right after that.

As for technical factors, Friday's rally lifted the pair above its 200-hour moving average, which is a positive signal, but there are some indications that the rebound may end today.

The EUR/USD pair is currently hitting the psychological threshold of 1.11 and the downtrend line visible since the end of last year, which is a key resistance zone.

The resumption of the downtrend could therefore be the most likely scenario for the EUR/USD pair in this context. In this case 1.1040-50 and 1.0990-1.10 will be the first support levels to be taken into account.

On the upside, a break above the psychological threshold of 1.11 would further confirm the positive profile, and could put the 200-day MM around 1.1129, ahead of 1.1149, and then the psychological threshold of 1.12.

Currently, the EUR/USD pair is trading at 1.1064.

Hourly EUR/USD chart