EUR/UD headed for a break of 1.1000?

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Feb 26, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    EUR/USD is currently losing its upside appeal as the month progresses towards the close having rallied at the start of the month to 1.1376.

    EUR's funding status needs to be considered in this regard. Although markets are far from carrying an outright risk-on appeal, there are signals that investors are becoming keener to take on risk in order to see a return on their otherwise idle capital. At the same time, the carry trade is only ever popular when,markets are calmer, i.e., when there is less volatility coupled with strong risk apatite.

    US in better shape than market's hysteria says?

    The US has started to prove that it is in better shape than the media hype has been suggesting of late and that has started to attract demand of US assets again and any dip in US stocks are recovered within the 2016 reversal that is in play stemming from the 10th of Feb's recovery seen in the S&P.

    Turning to the rest of the day ahead, the key data will come in the US session with the second estimate of Q4 GDP for the US.

    US Q4 GDP preview - Nomura

    1.1000 is holding up so far from the downside of the year's highs of 1.1376 on 11th Feb, but as the divergence between the ECB and Fed become a theme again, that level could prove top be very thin ice. ECB's March 10th meeting will be critical for EUR/USD and while Drgahi will leverage the weaker tone of the euro, he is still expected to be dovish.

    EUR/USD levels

    "The short-term technical picture has turned slightly positive, as per indicators pointing higher above their mid-lines. However, the pair needs to regain the 1.1045/50 zone, where the 200-day SMA has been capping upside attempts over the last three days. On the other hand, a decisive break below the 1.0960/55 area, 61.8% retracement of the 1.0710/1.1376 rally and this week's low, would put focus back on the downside, with the 1.0900 area as next bearish target," explained Ani Salama, economist at FXStreet.
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