EUR/USD continues to trade below the 1.30 mark, the currency pair managed to erase its losses on Monday following mixed economic reports from the Unites States, the currency pair recovered from its intraday low of 1.2907 to consolidate at 1.2941 with a loss of 0.15%.
The Currency pair saw unexpected recovery during the latter half of the day following the release of the U.S. industrial production data, the U.S. industrial production for the month of August slipped by 0.4% as a result of drop in the output of motor vehicles. Despite the drop in the overall industrial production, the output excluding the Automobile sector remained in the green by 0.1%, and the output showed an uptick of 4.6% on a year-over-year basis. The U.S. dollar has been on a very stable upward momentum against the single currency amid strong economic recovery of the U.S. economy and the single currency remains weak as a result of the disappointing recovery of the Euro Zone economy. The U.S. dollar is expected to remain strong against the single currency in the near future as the markets expects the U.S. Fed to announce a cut in the stimulus program by $10 billion in the month of October, while the ECB has announced the infusion of more stimulus in the near future.
The daily charts of the currency pair clearly indicate a slight build up of a buying momentum, the stochastic oscillator on the daily charts suggest the currency pair is recovering and more buying is coming in, the relative strength index too suggests the currency pair is oversold and is giving healthy buy signals, from the current levels the currency pair has a very strong support around 1.2860 levels and a strong resistance around 1.2990 levels.
Short the currency pair with a target of 1.2860 and stop loss of 1.3010.
Traders can go long with a target of 1.2990 and a stop loss of 1.2860.