The EUR/USD currency pair’s downward movement extended on Tuesday after key US economic data beat expectations. The pair has been on a downward movement since the start of the month and looks set to continue on this trend for the better part of the week.
EUR/USD Fundamental Analysis
The US ISM non-manufacturing PMI, a survey that measures the level of purchases in the US services economy rose to 59.7 basis points. On the other hand, New Home sales beat expectations after posting 651k on an annualized basis.
In Europe, the Brexit stalemate continues to paint a cloud of uncertainty in the market and this is not working out well for the Euro. However, there are more positives emanating from the EU’s recent economic data.
The EU Markit Services PMI for February was revised higher to 52.3 points while the Composite Index, which measures the performance of the Private Sector economy showed improvement after posting 51.9 points compared to the previous month.
EUR/USD Technical Analysis (the 240-min Chart)
The EUR/USD currency pair is on a downward trending movement which looks set to continue at least until the next bottom in the time cycles. There could be smaller recoveries that will lead to a series of lower highs and lower lows until the next bottom is triggered sometime next week.
Therefore, the bears seem to be in control for the next few days and they will be targeting profits at around 1.1250. On the other hand, the bulls will be hoping for a rebound that could take the currency pair from its current level of about 1.1300 to around 1.1350, which will be a suitable target for profits.
EUR/USD Technical Analysis (the Daily Chart)
When we expand the view using the daily chart, the EUR/USD currency pair appears to be trading within a bearish wedge that is forming a narrow symmetrical triangle. This further supports the long-term downward momentum before we can finally witness a major breakout.
When you look at the Relative Strength Index at the bottom, the EUR/USD currency pair is yet to reach the oversold region, which suggests that the bears still hold control.
In summary, the EUR/USD currency pair downward movement is supported technically in the short-term and long-term. However, while Tuesday’s US data did provide more support for a bearish outlook, the economic data from the EU could provide an unlikely anchor.