EURUSD Looks Ready To Retest After Breaking Daily Resistance
Everyone’s Favorite Pair has Broken Out of the Ranging Area after Poor Inflation Data for the US Last Week.
CPI data released last week, on January 12 to be exact, had a significant impact on major pairs. Euro USD is no exception, thanks to the poor CPI data, which became the catalyst until the pair was able to breakout the resistance that has hindered its rise since last November 2021. The United States is indeed beset by a serious inflation problem. On a monthly basis, the actual CPI data fell to 0.5%, worse than the 0.7% forecast by analysts. While the US Core CPI was also worse, it fell to 0.6%, breaking the optimism of analysts who expected the US Core CPI to touch 0.9%. Similar to America, several countries in Europe are also experiencing a fairly worrying inflation problem. For example, Spain, which scored the highest inflation since 1992, reached 6.5%. However, technically, the US CPI data has made EURUSD an attractive pair to trade this week after the break of resistance at 1.13800 level.
Quick Recap on EUR/USD
EURUSD does seem likely to be bearish on higher timeframes, to be precise on monthly and weekly basis. However, in terms of short and medium term horizons, EURUSD is interesting to watch after it managed to surpass strong resistance on the daily timeframe.
Let’s dive in a little deeper to see how EUR/USD fare on multiple timeframes:
EUR/USD Monthly Technical Analysis
Moving below the 50, 100 and 200 MA lines, EURUSD signals that the pair is in a bearish trend. On a monthly basis, the price gave additional bearish confirmation after breaking support in September 2021 at around 1.16400. Even the 50 MA on a monthly basis failed to hold the EURUSD down. However, last December, the EU managed to close bullish and made a new higher low because it did not pass the lowest level in November. The January candle has also surpassed its December high, signaling a potential rise in EURUSD on a monthly basis.
EUR/USD Weekly Technical Analysis
On the weekly timeframe, we can see more clearly that the price has been in a ranging area since mid-November 2021, between 1.12330 as support and 1.13800 as resistance. However, last week’s candle managed to pass solid resistance and posted a topwick that is ready to be filled this week. Even though on a weekly timeframe basis, EURUSD is still in a bearish trend, which is confirmed by the presence of the MA line above the price movement.
EUR/USD Daily Technical Analysis
On a daily timeframe basis, the candle on January 12 managed to surpass the resistance. The price closed bullish 3x last week until finally closed bearish on Friday, indicating that there is a possibility for buyers to take advantage of the opportunity for EURUSD which seems to be retesting at the key level. We can also draw an uptrend line which describes the structure of higher lows created on EURUSD since November 24.
Trading idea for EUR/USD
On the H4 timeframe, the price has fallen since touching the previous weekly high of 1.14800. It is possible that the price can retest a key level that was previously resistance, now it can become support.
Order: Buy Limit
Entry: 1.13800
Stop Loss: 1.13390
Target 1: 1.14400 (50% + BE)
Target 2: 1.14800 (25%)
Target 3: 1.15300 (25%)
Total risk: 1-2% Equity (Medium Risk Setup)
Reason: Bullish structure, break and retest with confluence at key level
ZFX Analyst’s Predictions
The United States is on a primary mission to eradicate inflation while controlling the growing Omicron case. Inflation that continues to skyrocket will likely make the Fed, as a policy maker, will immediately increase interest rates in the near future to carry out economic control with a constructive approach. Indeed, it has been previously reported that the Fed will soon taper and increase interest rates several times in 2022. However, there is still no clear certainty when it will be realized.
While the Euro is also not in a fairly good economic condition. The trade balance for the euro itself is still in the red, where last Friday, the actual data was valued at €-1.3 B, worse than analyst estimates at €-1.1 B. Coupled with Omicron conditions in Europe which are also rampant, adding to the uncertainty over economic conditions in the continent. blue. Now, only hints from technical analysis provide an overview of buying opportunities for Euro-USD.
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Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.
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