The Euro rose sharply against the U.S. Dollar on Friday, but traders couldn’t pinpoint one particular reason for the jump in prices. Most concluded it was fueled by short-covering after a prolonged decline in the single currency.
Some said the United Kingdom finally leaving the European Union or Brexit after extended negotiations, fueled a relief rally. Others said it was weak U.S. economic data behind the move.
In the U.S. consumer spending rose steadily in December, the Commerce Department said, but tepid income gains pointed to moderate consumption growth this year.
The Chicago Purchasing Management Index fell to a lower-than-expected 42.9, the lowest since December 2015, as new orders and production tumbled and producers forecast tepid activity in 2020.
On Friday, the EUR/USD settled at 1.1095, up 0.0063 or +0.57%.
In Europe, “Flash” or first estimate numbers showed Euro Zone growth was slower than expected in the last three months of 2019, while yearly inflation in January picked up in line with expectations.
But excluding unprocessed food and energy – what the European Central Bank (ECB) calls “core inflation” – prices grew 1.3% year-on-year, decelerating from 1.4% in December.
Daily Swing Chart Technical Analysis
The main trend is down according to the daily swing chart. A trade through 1.0992 will signal a resumption of the downtrend. Taking out 1.1173 will change the main trend to up.
The minor trend is also down. Taking out 1.1109 will change the minor trend to up. This will shift momentum to the upside.
The short-term range is 1.1239 to 1.0992. Its retracement zone at 1.1116 to 1.1145 is the next upside target. Since the main trend is down, sellers are likely to come in on a test of this zone.
The main range is 1.1413 to 1.0879. Its retracement zone at 1.1146 to 1.1209 is the next potential upside target. This zone is controlling the near-term direction of the EUR/USD.
Daily Swing Chart Technical Forecast
If the upside momentum continues on Monday then look for a drive into the minor top at 1.1109, followed by the short-term 50% level at 1.1116. Watch for sellers on the first test of this area.
Overcoming 1.1116 will indicate the buying is getting stronger. This could fuel a rally into the main 50% level at 1.1146.
On the downside, minor support is 1.1044, followed by 1.0992.
Taking out 1.0992 will signal a resumption of the downtrend with the November 29 main bottom at 1.0981 the next target. This is also the trigger point for an acceleration to the downside with the next major targets 1.0879 and 1.0838.
This article was originally posted on FX Empire
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