The dollar is starting so show some weakness driving EUR/USD above its 200-day moving average to set a bullish tone.
Last week’s US jobs report triggered some selling pressure in the greenback although a range had formed in US dollar index (DXY) following it. Yesterday, DXY broke lower from the range to signal more weakness, at least in the near-term.
Analysts are expecting retail sales in the US to show a gain of 0.3% in December, a tick up from the prior reading. One thing to watch for in the retail sales report is revisions for the prior month as this is quite common.
Earlier today, the consumer price index was reported to rise 0.5% in Germany for the month of December. The data was in line with expectations and did not have much of an impact on the exchange rate.
Aside from the retail sales report, the European Central Bank will release minutes from their latest meeting just ahead of the North American open. Traders will be combing through the minutes for any hints on the direction of monetary policy.
EUR/USD prices have broken above a resistance confluence that consists of the 200 and 20-day moving averages. Further adding to a bullish case, the pair trades within an upward trend channel.
It might be too early to confirm if EUR/USD has resumed higher within the upward trend that started in October, but over the near-term, the pair certainly looks like it is offering more upside.
The next area of resistance for the pair comes in at 1.1176. The level has held the pair lower on a few occasions between October and mid-December.
Support for the pair is seen at 1.1144 as this level held the pair lower on Monday and Tuesday. As well, the mentioned moving averages reside near it. Beyond that, further support is seen at 1.1129.
- EUR/USD has broken higher from resistance and signals more upside.
- ECB minutes and the US retail sales report will tend to keep volatility elevated in the pair for the trading session ahead.
This article was originally posted on FX Empire
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