EURUSD had been consolidating inside a symmetrical triangle pattern on the 1-hour chart, as it made higher lows and lower highs. Price finally picked a direction and broke to the upside, signaling that further gains are possible.
Price might need to pull back to the broken triangle resistance before heading much further north, as both stochastic and RSI are already indicating overbought conditions, which means that bulls need to take a break. In that case, EURUSD could draw support from the 1.0950 area.
The moving averages are still oscillating, indicating hesitation among buyers and sellers. Price could also pull back to this dynamic support area, which is somewhere in the middle of the triangle pattern.
EURUSD Fundamental Factors
Data from the euro zone was mostly weaker than expected yesterday since the final services PMI readings from the top economies featured downgrades. ECB head Draghi is set to give a speech today and dovish remarks concerning potential easing moves in March could drive the shared currency lower again.
However, dollar weakness has been strongly in play after Fed officials have been downplaying the odds of a March hike. Yesterday, FOMC member Dudley said that dollar strength might actually do more harm than good to the US economy, particularly in a low-inflation environment.
He added that financial conditions have been significantly tighter since their rate hike in December, which suggests that the US central bank might not be too eager to tighten monetary policy again in March.
Also, the pickup in oil prices spurred by rumors of an OPEC meeting this month is also supporting risk appetite. This could mean more losses for the safe-haven US dollar if more traders move their funds to higher-yielding currencies in anticipation of a commodity price rebound.
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