The EUR/USD has been consolidating since making a low on the year at 1.11. It has come up to 1.15 (actually spiked to 1.1533), but there is a smaller range within this 1.11-1.15 range.
Consolidation within Consolidation: As we can see in the 4H chart, EUR/USD also has a consolidation range in the middle of the 1.11-1.15 one. It has been trading between roughly 1.1260 and 1.1450. We have seen several failed attempts to break above 1.1450. At the start of this week, it was no different, as EUR/USD is being faded from the resistance area and is now poised to test that support around 1.1260.
Bearish Bias: We should note that currently when we look at the 4H chart, there is still a slight bearish bias not just because we know the prevailing trend is bearish, but also because price has been holding under the 200-period SMA. We can see that a break above 1.1450 at this point might take away this bearish bias.
Fundamental Release: Now, we did see disappointing German Ifo Business Climate data today, which accelerated the intra-session decline.
German Ifo Business Climate (Feb.): 106.8
(click to enlarge: source: forexfactory.com)
Still a Decent Reading: Although the headline number was lower than the forecast, it is still an improvement from January’s reading. Plus we have been seeing a rebound after the indicator deteriorated for 6 straight months.
With the business climate number not likely the impetus EUR/USD needed to continue the downtrend, we should look for support in the 1.1260-1.1270 area.
Looking for Support: We cam see price was already retreating before the German Ifo Business Climate Data. We also can see that there is no trending direction in the 1H chart. Therefore, if price approaches 1.1280 or extends a bit lower, let’s look for things like a bullish divergence with the RSI to give us a signal for another bullish attempt, within the context of the current consolidation.
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