Key Highlights
- The Euro after an upside move faced sellers near 1.1880 against the US Dollar.
- A crucial bearish trend line with resistance at 1.1870 on the 4-hours chart of EUR/USD prevented gains.
- China’s Consumer Price Index in Sep 2017 increased 0.5% (MoM), more than the +0.4% forecast.
- The yearly change in the Chinese CPI was +1.6%, just as the market forecast.
EURUSD Technical Analysis
The Euro recovered well from the 1.1660 against the US Dollar and above 1.1800. The EUR/USD pair failed near 1.1880 and is currently correcting lower.
The recent failure near 1.1880 was important since a crucial bearish trend line with resistance at 1.1870 on the 4-hours chart acted as a barrier for buyers. Moreover, the pair failed to break the 200 simple moving average around 1.1885 (4-hour, green) and started a downside move.
The pair has already moved below the 23.6% Fib retracement level of the last wave from the 1.1669 low to 1.1879 high. On the downside, the 100 simple moving average around 1.1885 (4-hour, red) is at 1.1800 to act as a support.
However, the most important support is near the 50% Fib retracement level of the last wave from the 1.1669 low to 1.1879 high at 1.1770. The pair is likely to find bids near 1.1770 in the short term. To the topside, the 200 SMA might continue to prevent gains above 1.1880 in the near term.
China’s Consumer Price Index
Today, the Chinese Consumer Price Index for Sep 2017 was released by the National Bureau of Statistics of China. The forecast was slated for a rise of 0.4% in the CPI compared with the previous month.
The actual result was better than the forecast, as there was an increase of 0.5% in the CPI in Sep 2017. Looking at the yearly change, the forecast was an increase of 1.6% and the actual was similar. Considering the Producer Price Index, the market was looking for an increase of 6.3% in Sep 2017 compared with the same month a year ago.
Once again, the actual was better, as the PPI rose 6.9% in Sep 2017. The market sentiment improved after the release, but the EUR/USD pair is likely to correct further towards 1.1770.
