The EUR/USD currency pair is still finding its way through very choppy trading conditions, presently holding just below the 1.0830 level in mid-European trade. Unsurprisingly, after the last four days, the duo is off to a soft start. In an ironic twist, its trajectory is being stunted by conflicting bullish and bearish market forces. Europe isn’t all bad, as some positive economic signs continue to appear including the surprise improvement in the German IFO – Business Climate index, although still below expectations. However, the pair has dropped to 1.0776, marking a new low since March 6.
A technical analysis of the EUR/USD pair shows a tug of war between bullish and bearish indices. To the downside, the pair is receiving upward support from buyers close to the bullish 100 Simple Moving Average (SMA). Nevertheless, it faces key opposition from a bearish 20 SMA, which caps its upward extension. The relatively simple pair of images above encapsulates the ongoing tug-of-war between these two approaches. It has been printing lower highs and lower lows, but still above a bullish 20 SMA. With continued bearish downside still a possibility, high profits are restricted.
Traders have observed that the EUR/USD pair is heavily shackled by these opposing technical signals. The inability to close above the bearish 20 SMA shows you have really strong lack of bearish momentum. That gives some indication of a continuing soft trading tone. EUR/USD has held remarkably well, clawing back much of its early gains. Each of these is an impressive feat in today’s challenging market, but that’s not all.
Given this backdrop, the recent economic data out of Germany serves as an even greater complicating factor to the currency pair’s performance. Finally, in March, the German IFO Business Climate index rose dramatically. This generally positive change should’ve provided a bullish euro tailwind. Nevertheless, the upbeat data did not meet expectations, keeping traders on edge over euro’s outlook. This mixed economic picture adds to the current volatility in EUR/USD trading.
Along with today’s technical indicators and economic data, it’s obvious that bigger market forces are working to counteract our progress. Market expectations As currency traders look to the future, they are keen to gauge global developments. They’re especially keen to any moves in monetary policy or escalation in geopolitics that would impact currency valuations. These developments tailor a degree of uncertainty to the EUR/USD’s future path.