The EUR/USD has fallen away a touch thanks to the USD rally on Friday. The longer-term trend is still in place. We are targeting a long entry on a pullback to 1.2300. Our upside target is set at 1.2500 with a stop loss in place at 1.2150.
EUR/USD 240 min Chart - EUR/USD is Still Bullish
Central Bankers to Drive Forex Markets This Week
Last week the story was really the declining USD. Despite expectations of a rate hike and solid inflation, the Dollar declined. That sent the EUR/USD pushing higher and we are now back testing the most recent highs at 1.2500.
The direction of the EUR/USD is largely going to be a function of what the respective Central Banks have to say. Out of the US we have the FOMC meeting minutes. As it stands the US Federal Reserve (FED) is getting set to hike interest rates in March. Markets have priced in a 100% chance of a hike. The FOMC minutes will give us an insight into if there is any doubt surrounding the decision. There has previously been some concerns over the level of inflation which may or may not be a factor after the most recent CPI figure.
In Europe we are getting an insight into the thoughts of the ECB. The Eurozone economy isn’t travelling as well as the US and there is no talk of rate hikes. The main issue is getting rid of QE which hasn’t really worked to date. They are basically trying to normalize their monetary policy before proceeding with interest rate rises.
The issue is now that both countries appear to have an outlook that is bullish. I believe the EUR is slightly more bullish than the USD in the short-term so we are looking for more upside to come this week in the EUR/USD.
Technical Analysis - The Key Levels
The overhead resistance in the EUR/USD is of most interest this week. We’ve tested 1.2500 three times now and each time resistance has held up strongly. There still might not be enough momentum for a big breakout but I suspect we will get another test this week.
EUR/USD - Key Levels
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