EUR/USD: bulls are still here
By Elizaveta Belugina, FX BAZOOKA analyst
EUR/USD breached its consolidation range to the upside. Mark Jensen outlined such scenario yesterday saying that the pattern resembles what was seen on Jan. 22.
The ECB didn’t announce new stimulus measures yesterday. The market players were looking forward to dovish Draghi, but he actually wasn’t such. The regulator gave no hints that it’s planning to ease policy in March. If traders believe that there’s no need to be concerned about low prices and put their attention to growth, euro has a chance of gaining more.
EUR/USD faces resistance from the daily Ichimoku Cloud and 100-day at $1.3600. There’s also an obstacle at $1.3640 (50-day MA), while support is located at $1.3560 and $1.3500. With yesterday’s failure to close at daily highs and the Cloud above the current price the setup looks bearish. However, with the US NFP ahead at 13:30 GMT trading will take place in range until we get a spike in volatility. Economists expect better figures for January after dismal December reading (forecast is 185K vs. 74K previous). According to Credit Agricole, the negative skew in the distribution of forecasters suggest the market expects a downside surprise. A reading in line or higher than expected may cause a sell-off in EUR/USD. However, another poor reading will turn the market negative about USD.
Trading next week will greatly depend on whether euro manages to close above $1.3600, the middle point of the last week’s candle.
Chart. Daily EUR/USD