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EUR/USD Forecast: Bullish Case Firmer As The Pair Surpassed The 1.1200 Figure

Valeria Bednarik - Chief Analyst at FXStreet

EUR/USD Current Price: 1.1202

  • A Chinese delegation will head to Washington this Saturday, likely to sign phase one of the trade deal.
  • Wall Street fell despite good news, probably hit by profit-taking.
  • EUR/USD bullish case firmer as the pair surpassed the 1.1200 figure.

The EUR/USD pair peaked at 1.1210 early on Monday, a level that was last seen mid-August, as the broad dollar’s weakness was again the main theme across the FX board. Volumes remained thin amid winter holidays, while the calendar was quite scarce. The greenback recovered some ground during London trading hours, but resumed its decline with Wall Street’s opening, with the pair extending its advance up to 1.1220. Equities were down despite some encouraging news in the trade war front, as the Chinese trade negotiator, Liu He, will reportedly visit Washington this Saturday, most likely to sign phase one of the trade agreement. Indexes decline is likely linked to profit-taking ahead of the year-end.  

The US just published November Wholesale Inventories, which came in flat, better than anticipated, and the trade balance for the same month, with the deficit down to $63.19B, also beating expectations. The December Chicago PMI was up to 48.9 vs. the 48 expected, while November Pending Home Sales rose 1.2%. The only negative note came from the  December Dallas Fed Manufacturing Business Index, which fell to -3.2 against the 1.5 forecast. The macroeconomic calendar has nothing relevant to offer this Tuesday.

EUR/USD Short-Term Technical Outlook

The EUR/USD pair is trading near the mentioned high, retaining its bullish stance according to intraday technical readings. The pair has several relevant highs in the 1.1230/40 price zone, providing resistance, although the pair could easily break through the level in the current thinned market’s conditions. In the 4-hour chart, technical indicators head north, despite being in extreme overbought levels. The pair, in the meantime, continues advancing above all of its moving averages, with the 20 SMA heading firmly higher above the larger ones.

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