Will The Euro Remain Bullish In The Coming Days?
- Euro exhibiting bullish bias.
- RSI Oscillator trending higher within neutral territory.
- Fed likely to hold rates steady at 0.50%
The euro was strongly positive last week as the pair meandered higher in the early stages after a strong showing in the EU Services and Manufacturing PMI results. In fact, the recently embattled pair saw a 100 pip gain in the latter stages of Friday’s session due to some US weakness. However, it remains to be seen if the pair can retain its position above the key 1.09 handle. Subsequently, we take a look at the pair’s potential prospects over the next few days.
Last week was particularly exciting for the eurodollar as the pair started the week facing a strongly bearish trend. However, the euro managed to find its feet after a relatively strong showing from the EU Services and Manufacturing PMI’s which came in above estimates at 53.5 and 53.3 respectively. Subsequently, the pair commenced a sedate drift higher until Friday’s session saw the pair break for the stars as the EU Economic Sentiment figures exceeded forecasts at 106.3.
In contrast, the US Final Michigan Consumer Sentiment data release proved highly disappointing at 87.2 and even wiped out any gains from the stronger US GDP results. Subsequently, the pair was resplendent as it broke above the 12 EMA to finish around the 1.0971 mark.
Looking ahead, there is likely to be plenty of volatility around in the week ahead with both the EU GDP and US Non-Farm Payroll figures due out. In particular, the market will keep a close watch on the US NFP figures given the heightened interest in macro indicators in the lead up to the Fed’s FOMC meeting. The forecast has the NFP number at 175k but, as always, there is an extremely high chance of a deviation. In contrast, the Eurozone GDP figures are likely to provide a result that satisfies expectations.
From a technical perspective, the recent rally has lifted price action back above the 12 EMA whilst the RSI Oscillator is now trending higher within neutral territory. Subsequently, our initial bias is bullish for the week ahead. The recent rally seems to have confirmed that the short term bearish trend may have completed around the 1.0866 mark.
Therefore, keep a close watch on the pair for further gains in the week ahead that could see it challenge the key battleground of the 1.10 handle. Support is currently in place for the pair at 1.0957, 1.0892, and 1.0859. Resistance exists on the upside at 1.1040, 1.1279, and 1.1366.
The next few days are likely to be relatively illuminating given price action’s location just above the 12 EMA. Subsequently, if the pair is able to hold above 1.09, and the current RSI Oscillator reading is certainly suggesting it will, then the pair is likely to commence a challenge of the key 1.10 handle. Although the pair is likely to be bullish, keep a close watch on the pending US FOMC decision as it could invalidate the current technical readings.
Source: Investing.com, wrote by: Steven Knight - Blackwell Global