EUR/USD: A correction is looming after the rally on Friday


EURUSD – daily Chart


By David Wagner

The EUR/USD has surprised Friday by an upward movement in a story yet mixed, but after a few hours of consolidation near its recent highs this morning, the pair seems to be heading towards a correction.

Note that the pair GBP/USD had gained more than 100 pips on Friday, which has had a positive impact on the Euro correlation, while the Dollar was affected by a very bad Chicago PMI.

But the increase which has resulted, on the Euro has brought the EUR/USD pair on a key resistance zone, formed a line of downward trend visible since the beginning of the month (currently around 1.1090), and the psychological threshold of 1.11.

The Euro-Dollar appears to be currently turning down from this area. The pair is currently testing the immediate support, that is the moving average 100 days to 1.1067.

A break confirmed below this level would be a bearish signal, which would be in line of sight to the area around 1,1050 will be the next support to take into account, before the area around 1.10.

Has the upside, a break above 1.11 confirms also a break above the trend line downward, but other key obstacles are a little above, with the 200-day moving average 1,1125 and the psychological threshold of 1.12.

From the point of view of the news, it should be noted that the manufacturing PMI final of the euro area for the month of January, which has slightly been revised upward from 47.9 to 47.9, never at any time supported the EUR/USD. It should be noted, however, that the plongen of the GBP, which has now made all of its Friday gains, has prevented the Euro to enjoy these figures were better than expected.

For the rest of the day, the EUR/USD will be potentially influenced by the manufacturing PMI of the United States at 15: 45, and then especially the ISM manufacturing index US, at 16h, one of the economic indicators, the most important of the week.

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