The EUR/USD dollar currency pair has been on a wild rollercoaster ride. In the process, it’s making a move on the important 20-day Simple Moving Average (SMA) at 1.1691. This movement occurs against a backdrop of evenly placed technical indicators, which show no real directional impetus. Market analysts are scratching their heads over the pair as it straddles neutral to positive territory. They’re more interested in how these trends might shape future trading.
On the EUR/USD, recent patterns show where the pair has been surprisingly strong. It has since rebounded back above a largely horizontal 20-week SMA, which acts as dynamic support at 1.1662. Market participants are increasingly eyeing this key level. The 20-week, 100-week and 200-week SMAs all lie underneath the current trading levels, bolstering the bullish momentum. The pair reached a high of 1.1808 in December. Just a few months prior, it jumped to 1.1918 in September, proof of its bullish charge.
Current Technical Indicators
Technical indicators for the EUR/USD currency pair have a neutral picture. Furthermore, the Relative Strength Index (RSI) is trending higher, now at 57. That would mean the duo hasn’t yet reached overbought levels. At the same time, our Momentum indicator has staged a solid rebound after briefly testing its midline, suggesting more upward progress is possible.
Market participants need to be in the mode of thinking through what future economic announcements will mean. Market sentiment could be heavily impacted by geopolitical developments.
“Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland.” – Donald Trump
Economic Sentiment and Its Impact
Germany’s economic terrain is especially important, as it often sets the tone for overall EUR/USD forecast sentiments. Recent PMI readings printed at a dismal -72.7, an indication of the storm brewing under the German economy’s hood. In good news for Europe, the key January ZEW survey on Economic Sentiment came in well ahead of consensus expectations, improving to 59.6 from 45.8 in December. Overall, this shift reflects a more favorable and positive outlook among investors and analysts about what’s to come from the economy.
These shifts in sentiment can greatly move the dynamic of trading the ECB’s most popular currency pair – the EUR/USD. Germany’s healthier overall economic picture may create new buying pressure. As traders bid up the currency pair in response to these positive developments, the currency pair will increase.
Support Levels and Future Outlook
Whether trading and market jitters could have pushed the currency below those key support levels will be a central question determining the EUR/USD’s next moves. Traders will be looking very closely at the rising support at 1.1662. They’re curious to see if this level proves resilient in these treacherous market waters. It seems that buyers have taken this cue and are coming in heavily as they test the longer-term support at 1.1594. This level can act as a safety net for the EUR/USD pair.
All three SMAs still in ascendance under the present level indicates that bullish momentum might persist if the market environment remains conducive. The upshot is that traders are feeling a bit of cautious optimism tempered by concern over contradictory economic indicators. Consequently, the future path of the EUR/USD is unclear, though it appears primed for further appreciation.