The EUR/USD currency pair on Thursday pulled back from the current multi-month highs of about 1.1240 to trade at around 1.1206 following a post-Christmas rally. The currency pair bottomed at around 1.1070 just before Christmas but has since recouped those losses to maintain a bullish trend in an ascending channel.
The currency pair has since pulled off overbought levels in the RSI indicator in the 60-min chart and this creates some interesting positions for both the bulls and the bears.
EUR/USD Fundamentals Overview
From a fundamental perspective, the EUR/USD currency pair is trading at the back of a quiet period in the global financial markets amid the Christmas day and the New Year celebrations. However, with the start of the new year, there is a lot to look forward to going into the tail-end of the week.
On Monday, the Spanish GDP missed the (YoY) expectations for Q3 of 2% with a 1.9% change the (QoQ) GDP was in line with expectations at 0.4%. And on Thursday, the Italian Markit Manufacturing PMI missed the expectation of 47.2 with 46.2 while the German, French, Spanish and the EU PMIs all beat expectations.
In the US, the Chicago Purchasing Manager’s Index for December beat the expectation of 48 with 48.9. Pending Home Sales for November also beat the expectations of 1.1% (MoM) and 5.8% (YoY) with 1.2% and 7.4% respectively. However, the Dallas Fed Manufacturing Business Index for December missed the expectation of 1.5 with 3.2.
EUR/USD Technical Analysis (the 60-min Chart)
Technically, the EUR/USD currency pair appears to be trading in an ascending channel, which indicates a short-term bullish bias in the market sentiment. The currency pair has recently pulled off new multi-month highs after hitting overbought levels thereby creating some interesting opportunities for traders.
Therefore, the bears will be targeting short-term profits at around 1.1187 or lower at 1.1171. On the other hand, the bulls will target rebound profits ta around 1.1222 or higher at 1.11240.
EUR/USD Technical Analysis (the Daily Chart)
In the daily chart, the EUR/USD currency pair appears to be trading in a descending channel, which indicates a long-term bearish bias in the market sentiment. The currency pair has recently climbed above the 200-day SMA while the 100-day SMA is several pips below. This indicates an attempt by the bulls to seize control from the bears.
Therefore, the bulls will target long-term profits at around 1.1312 or higher at 1.1412. On the other hand, the bears will look to pounce by targeting profits at around 1.1082 or lower at 1.0975.