Currency Analyst since 2010

EUR/USD: technical picture deteriorates

EUR/USD is trading near $1.2900 after closing below $1.2950 yesterday. The pair has opened below the daily Ichimoku Cloud that will now be acting as resistance. The 55-day MA has approached the 200-day MA in the $1.2990 area – if the first crosses the latter to the downside, there will be another bearish signal. Another resistance lies at $1.3029 (yesterday’s high, 200-period MA on H4).

On the downside, watch for $1.2880 (55-week MA) and $1.2860 (trend line from July 2012). Note that there’s some divergence on the H4 MACD and RSI – one can’t rule out some pullbacks and short coverings. There’s an important support at $1.2770/50 (April/March lows and the neckline of the head and shoulders pattern – see the weekly chart).

We have the euro zone’s flash Q2 GDP release on the agenda today at 09:00 GMT. The pace of the European economic contraction is expected to slow down. However, German GDP growth has disappointed the market (+0.1% vs. +0.3% expected), so the release of European figures may also disappoint and cause further selling of euro. In the US watch for PPI, industrial production and Empire State manufacturing index.

Chart. Daily EUR/USD

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