The EUR/USD currency pair pulled back on Tuesday to trade at around the 1.1117 level heading towards 1.1110 just days after topping the 1.1150 level. The currency pair retains a bullish outlook in the short-term trading market as it continues to trade in an ascending channel.
The pair has recently dropped below the 100-hour MA line but remains a few pips above the 200-hour SMA, which indicates that the pair could be consolidating in the short-term as the bullish momentum fades.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of some key developments from Brexit coupled with positive economic data from both the EU and the US markets.
On Monday, the German Producer Price Index for September beat expectations of -0.1% (MoM) and -0.3 (YoY) with 0.1% and -0.1% respectively. There is still no clarity regarding the progress of the Brexit deal and this is causing some uncertainty in the market.
On the other hand, the US-China trade talks still continue to haggle on which in turn pegs the greenback’s upside potential. On Tuesday, the US Existing Home Sales missed expectations of 5.45M with 5.38M while Existing Home Sales change also came short of expectations with -2.2% versus -0.7%.
The US Richmond Manufacturing Index for October came in at 8, beating the expectation of -14.
EUR/USD Technical Analysis (the 60-mn Chart)
Technically, the EUR/USD currency pair appears to be experiencing a short-term bullish bias as it continues to trade within an ascending channel in the 60-min chart. The currency pair recently bounced off the oversold boundary but then pulled back again off the medium section of the normal trading zone to demonstrate the exhaustion of the bullish momentum.
Therefore, the bears will be targeting short-term profits at around 1.1102 or lower at 1.1074. On the other hand, the bulls will hope for an immediate rebound towards 1.1156 or higher at 1.1178.
EUR/USD Technical Analysis (the Daly Chart)
In the daily chart, the EUR/USD currency pair appears to have recently made a bullish breakout off the downward trending channel. This illustrates a shift from the bearish bias that dominated the market since June this year. The pair is now testing the 100-day SMA while the 200-day SMA is just a few pips higher.
Therefore, the bears will be targeting pullback [profits at around 1.1052 or lower at 1.0982. On the other hand, the bulls will be targeting long-term profits at around 1.1210 or higher at 1.1274.
In summary, the EUR/USD currency pair appears to be experiencing a short-term bullish pressure after recently breaking out of a bearish channel. However, it remains to be seen how sustainable this recovery is given the Brexit uncertainty.