© O Financista.
By David Wagner
After having hesitated under the psychological threshold of 1.09 in the course of the day yesterday, the pair EUR/USD has finally crossed over into the evening, and highlight its rising on Thursday morning, with a peak at 1.0934 for the moment.
This upward movement serves to confirm even more of a bullish reversal which is visible from the rebound surprise last Friday.
However, if the study of graphics can observe a bullish trend is healthy for almost a week, it also helps to realize that the Euro approach of important barriers.
In addition, from a fundamental point of view, we must admit that the context really does not lend to the rise.
What are the fundamental factors which could bring down the Euro ?
Yesterday, the only important statistic in the economic calendar included sales of new homes, which are proven to be very strong, +7.9% vs. +3.5% expected for the month of January, but this failed to support the dollar and push EUR/USD significantly lower.
But mostly, the panic that drives the markets due to the coronavirus would also be enough to bring the Euro down. The spread of the virus in Italy, now the most affected country outside of Asia, as well as in Germany, Spain and France, and the simple fact that Europe is more exposed to the chinese economy than the United States, did not question the rise of the Euro this week.
Thus, one may wonder if the end of the month approaching, adjustments of the end of the month could not be responsible for the rise of the Euro, at least in part, but it’ll have to wait for the beginning of next month to see if this is true with a fall of the Euro, if it happens not before.
It should also be noted that in the face of anxiety-related coronavirus, the expectations of interest rate cuts from the Fed are making progress, as can be seen on the barometer of the Fed funds rate Investing.com, which is a factor bearish for the Dollar, and therefore support for EUR/USD.
However, in the end, the ECB is also likely that the Fed to soften its policy in order to avoid too much heavy economic consequences in the face of the sars coronavirus.
What are the technical factors that could block the continued rise of the Euro ?
From a technical point of view, although the EUR/USD has sent several signals bullish key these days, with a bullish trend is healthy, it should be noted that major barriers approach, and could call into question the continuation of the increase.
There are, in fact, in daily data, a line of the downward trend visible since the beginning of the month of January, the EUR/USD should meet to 1.0970 at his current rate of progress.
Little bit above, you will then find the threshold of major psychological of 1.10, which could also prove to be a barrier, therefore, before the moving average 100 days to 1.1045.
The mistrust is therefore recommended
The Euro could further its gains, and seems to be well on your way to see a new day rise on Thursday, but given the magnitude of the increase in these last days, the caution is to definitely update from now on.
Finally, it should be noted that the economic calendar pretty busy the day will submit the Euro’s rise to a number of tests, including durable goods orders, the second estimate of GDP US Q4 and registration and weekly jobless claims at 14: 30, and then the promises of housing sales to 16h.