The Euro after trading in a very narrow range in the early morning session is experiencing buying interest at lower levels, pushing the currency above its 100-day moving average. It is currently stationed below its resistance zone near the $1.25445 level. The USD was higher against most major currencies, especially the yen, hitting a 7-year high after the ratings agency, Moody’s downgraded the Japanese economy. However, the USD is undergoing some selling pressure at higher levels as traders’ book profits, which has pushed the Euro higher.
Earlier both the Chinese and German PMI data came in well below market expectations which further weakened the Euro. Leading market analysts believe that the European Central Bank will be forced to introduce its own version of Quantitative Easing as early as next year to support the flailing Eurozone economy.
Investors should be aware of the slew of economic reports set to make its way out of the U.S. over the course of the week in order to fully understand the economy’s underlining strength and receive some sort of an as to the policy stance that will be adopted by the Federal Reserve. Some economists feel that the tepid economic reports released last week out of the U.S. could force the Fed to temporarily halt its plans to hike short-term interest rates.
When looking at the hourly chart for the EUR/USD, its momentum indicators are implying buy, clearly indicating buying interest at current levels. Additionally, its relative strength index is now giving a buy signal which is undoubtedly a bullish indicator.
Long the EUR/USD at current levels for an intermediate target at $1.25445 in the short-term.