The EUR/USD currency pair currently has downward pressure on it and is trading at approximately 1.1700. Bearish traders have been attempting to force the pair down further, but market sentiment indicates that this is a losing battle. This comes after a loss of momentum during the European trading hours. To start the POSIT market, and just ahead of Wall Street’s opening trading, EUR/USD is around a key inflection area. Traders are keeping a close eye on important technical levels.
The 20-period Simple Moving Average (SMA) for EUR/USD is on a downtrend. As it stands now, it’s loitering above the price, showing resistance at approximately 1.1723. The 100-period SMA is giving solid resistance today at 1.1746. In the meantime, the 200-period SMA support provides a strong floor at 1.1673. These moving averages are instrumental in indicating future price action as active traders study the pairs paintbrush strokes.
Even after a bounce back on Tuesday, EUR/USD had the opportunity to head out for the selling-levels in 1.1740 vicinity. This retreat continues the currency pair’s recent bullish behavior. In particular, it had bounced impressively off of the 20-day SMA, which was priced at 1.1744. The pair floats right above the big figure psychological support level at 1.1659, set early this week. Analysts have grown more concerned that a move beneath this key threshold could embolden the bears and hand control of the market over to the sellers.
The Composite Purchasing Managers’ Index (PMI) for the euro area has contributed to the current market dynamics, printing at 51.5, which marks a decrease from November’s figure of 52.8. Beyond the trade, this dip in business activity is a reflection of larger macroeconomic trends and may weigh on trader sentiment in the months ahead.
“The euro area economy registered a twelfth successive month-on-month rise in private sector business activity at the end of the year,” – Hamburg Commercial Bank (HCOB)
As all market players digest these recent changes, the attention is still on whether EUR/USD can hold firm above its key support areas. Analysts expect that should it fall below 1.1659, it will mark the beginning of a more pronounced bearish trend. That is a recipe for added selling pressure in the marketplace.