© Reuters. EUR/USD has tested 1.13, but the risk of a correction remains high
The pair EUR/USD has posted yesterday a third consecutive day of rebound, ending at a few pips close to cancel the dive last Thursday in the face of the meeting of the ECB’s more dovish than expected.
Recall that yesterday, the sharp rise in the GBP/USD in a first part of the day had benefited the Euro. Conversely, the fall of the Pound following the highs of yesterday there has been no downward impact on the EUR/USD.
However, despite the rebound of the Euro-Dollar in recent days, the caution is. As we already pointed out yesterday, only a clean break above 1.13 will invalidate the bearish trend of the background visible from the top of the end of February, from a technical point of view.
In the waiting, the risks of reversion of the decrease appear to be important, given the fundamental backdrop gradient in Europe, with the ECB, which has, again, severely degraded its growth forecasts for this year, while pushing its expectations in terms of a rate increase at its meeting last week.
In regards to the economic calendar, we note that the day after the very busy yesterday, the program for the day will be much more dense, with industrial production in the Euro Zone this morning at 11am, and then with the durable goods orders and the IPP US at 13: 30.
Of course, the subject of the Brexit will also need to be monitored closely, after yet another rebound negative yesterday evening due to the negative vote of Parliament UK about the agreement ripped up by Theresa May to the EU the previous day, so the most likely scenario is now for an exit from the EU without an agreement.
Finally, it’s also important not to forget the trade war China-USA, the market is anxiously awaiting the announcement of a top Trump-Xi that will help to confirm that a trade agreement between the two largest economies of the world is actually imminent.
Technical analysis EUR/USD
From a graphical point of view, several barriers are located close to current levels, with a trend line to the downside is visible from the summit of 28 February currently at 1.1295, the moving average 200 hours to 1.1291, and the psychological threshold of 1.13.
At this stage, the risks of a correction seem to be so high, potential sales opportunities to the key. In the event of a decline, the next support objectives and downside potential will be 1,1250-60, 1,1220, 1.12 and 1,1175 in a first time.
In the case of a break above the resistance zone of 1.13, the next upside potential will be 1,1325, 1,1350, 1.14 and 1,1420.
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