The Euro continued its upward swing from the overnight session and is currently trading higher against the USD in the early afternoon session, which is certainly a welcome relief for all Euro bulls. The Dollar still continues to be under pressure against all major currencies, post Friday’s NFP report.
Even though the Euro is indeed higher, it relented some of its gains after economic reports from Italy suggested that the country may be heading towards a recession. However, this was slightly offset by a stream of positive data that showed Investor Confidence level nudging up to -11.9 as opposed to -13.5. Unfortunately, for the Eurozone this is its third straight month of negative confidence data.
Many analysts are speculating that the European Central Bank will have to start increasing its balance sheet with its own version of QE as economic reports continue to suggest a deceleration in the economy. Traders should keep a close eye on the economic reports coming out of the U.S. economy in the latter half of today’s trading session.
When looking at the hourly chart for the EUR/USD, the currency pair has taken support at the $1.24708 level, while its resistance continues to remain near the $1.25445 zone. However, it is imperative to state that it continues to trade below its important daily moving averages.
Meanwhile, the momentum indicator for the EUR/USD is giving a sell signal, which is indicative of a shift towards the sell side. Lastly, the relative strength index for the currency pair is providing us with yet another sell signal indicating a loss of inherent strength regarding the current price action.
Short the EUR/USD if it moves below $1.24708 with a short term target at $1.23545, with a stop loss above $1.25065.
Long the EUR/USD if it moves above $1.25065 for a near term target at $1.25445.