EUR/USD: The Euro continued to rise, but the risks of a correction are high

© O Financista. The Euro maintains a profile uptrend – The EUR/USD pair remains well directed this Monday morning, with a new high of 1.1425 for the moment, after having already displayed a rebound of more than 100 pips last Friday.

Recall that the EUR/USD had been significantly penalized by the pmis disappointing, and the meeting of the ECB’s dovish tone last Thursday, which has resulted in a new low annual 2019 to 1,1288 Thursday evening.

The day of Friday was then the opportunity for a significant rebound, mainly due to the weakness of the us Dollar, and profit taking. The Euro-Dollar was able to climb back above 1.14 and to finish the week above this key psychological level.

Note that the rebound on Friday was surprising, with several negative news during the day, including the degradation of the growth forecasts 2019 Germany (from 1.8% to 1%), and with the IFO index of business climate in German to the lowest since march 2016, elements of which have been ignored by the traders.

Today, the economic calendar will be empty for statistics potentially influential, but traders will have to digest the info of the weekend, including a temporary agreement to end the shutdown in the USA for 3 weeks. This does not solve the problem, but this will without doubt be a resurgence of confidence on the part of the market, with 800.000 employees who are to be re-paid, at least until the 15th of February.

The trade war China-USA will also be on the front of the stage during the next few days, with a chinese delegation arriving this Monday in Washington, d.c., for the preparatory work in view of a meeting of the highest level from Wednesday between the Trade representative to US Robert Lighthizer and the chinese vice Premier Liu.

It should also be noted that the Euro found some support this morning with the confirmation of the AAA rating of the German debt by Fitch Rating, and this despite the severe lowering of growth forecasts to 2019 was announced last week.

This afternoon, we will monitor a speech by Mario Draghi, the ECB president, will speak at 15: 30, but there is little chance that it brings new information so soon after the ECB meeting last week.

Later this week, it will then be the turn of the Fed to attract all the attention on it, with a meeting during which the investor will seek a final confirmation of the turning dovish from the Fed and its intention to pause the tightening of rates, for an indefinite period.

From a graphical point of view, the profile of short-term the pair EUR/USD is bullish, and this will remain the case as long as the pair maintains the psychological threshold of 1.14. Below this level, the next supports to watch are at 1,1380, 1,1350, 1,1330 and 1,1290-1,13 in a first time.

The increase, 1,1420-25 is the first resistance to take into account, before 1,1450, 1,1480 and 1.15.

To sum up, the profile remains bullish at this stage, but the absence of catalysts in order and speed of recent gains induce a risk of an important correction.

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