Key Highlights
- EUR/USD found support near 1.0990 and started a strong recovery above 1.1040.
- A key declining channel was breached with resistance near 1.1035 on the 4-hours chart.
- The Euro Zone GDP grew 1% in Q4 2019 (Prelim) (YoY), less than the market forecast of 1.1%.
- The US ISM Manufacturing Index could increase from 47.2 to 48.5 in Jan 2020.
EUR/USD Technical Analysis
This past week, the Euro extended its decline below the 1.1020 support against the US Dollar. However, EUR/USD found support near 1.0990-1.0000 and recently started a strong upward move.
Looking at the 4-hours chart, the pair climbed above the 1.1020 and 1.1040 resistance levels to move into a positive zone and recover losses. Besides, there was a break above the 23.6% Fib retracement level of the downward move from the 1.1172 high to 1.0992 low.
More importantly, a key declining channel was breached with resistance near 1.1035. It opened the doors for more gains above the 1.1050 and 1.1060 levels.
The pair even spiked above the 100 simple moving average (red, 4-hours), and the 50% Fib retracement level of the downward move from the 1.1172 high to 1.0992 low.
It seems like EUR/USD might continue to recover towards the 1.1120 and 1.1150 resistance levels. An intermediate resistance is near the 1.1130 level.
Conversely, if there is a downside correction, the previous resistance near the 1.1050 area may perhaps act as a decent support in the near term.
Fundamentally, the Euro Zone Gross Domestic Product report for Q4 2019 (Prelim) was released by the Eurostat. The market was looking the GDP to grow 1.1% in Q4 2019.
The actual result was lower than the forecast, as the Euro Zone GDP increased at an annual rate of 1%, less than the last 1.2%.
The report added:
Seasonally adjusted GDP rose by 0.1% in both the euro area (EA19) and the EU28 during the fourth quarter of 2019, compared with the previous quarter, according to a preliminary flash estimate.
Overall, EUR/USD is facing hurdles, but it might continue to recover towards 1.1150. Similarly, there was a strong rise in GBP/USD above the 1.3150 resistance area. Conversely, USD/JPY is trading in a bearish zone below 109.00.
Upcoming Economic Releases
- Germany’s Manufacturing PMI for Jan 2020 – Forecast 45.2, versus 45.2 previous.
- Euro Zone Manufacturing PMI Jan 2020 – Forecast 47.8, versus 47.8 previous.
- UK Manufacturing PMI for Jan 2020 – Forecast 49.8, versus 49.8 previous.
- US Manufacturing PMI for Jan 2020 – Forecast 51.7, versus 51.7 previous.
- US ISM Manufacturing Index for Jan 2020 – Forecast 48.5, versus 47.2 previous.
