Mixed Signals in EUR/USD Outlook as Market Awaits Key Catalysts

Mixed Signals in EUR/USD Outlook as Market Awaits Key Catalysts

The EUR/USD currency pair is in a difficult period of indecision. We would look for first negative signs if it closes under the Tenkan-sen. The two are in the midst of daily cloud that extends from 1.1600 to 1.1685. It’s done a good job of maintaining itself above the shattered daily Tenkan-sen line at 1.1635 for three full days. Nonetheless, the technical signals continue to warn that traders need to be on high alert.

A continued close under the daily cloud could start to turn the market’s mood decidedly bearish. Resistance 1.1685 1.1700 1.1730 1.1774 On the downside, support levels are found at 1.1635, 1.1600, 1.1555 and 1.1542. This mixed configuration of moving averages on the daily chart indicates that market participants are getting mixed signals. New negative momentum further clouds the outlook.

Traders are closely watching for new catalysts that may shift the currency pair’s direction. Gold prices rebounded after a recent pullback. Another important outcome of this shift is the change it could have on investors’ risk appetite. Anticipation surrounding the US inflation report set to be released on Friday could generate new trading signals, as it may provide insights into economic conditions.

Further, the reopening of the federal government this past Friday is likely to have a big influence on the market going forward as well. Of note, a close above the top of the daily cloud would likely reawaken bullish sentiments for the EUR/USD pair. A close above the daily Kijun-sen at 1.1730 validates this bullish development. Traders looking for direction can’t take their eyes off of this key level.

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