On its 4-hour time frame, it can be clearly seen that EUR/USD is stalling at a key area of interest where buy and sell orders are focused. The pair is currently finding support around the 1.3800 major psychological level, which has also acted as resistance in the past.
The path of least resistance for this pair is downwards though, as the ECB (European Central Bank) has indicated its preference for implementing further easing measures while the US Federal Reserve has had an inclination for tightening monetary policy.
Take note though that the US existing home sales is up for release today and it might show a slowdown in sales. Meanwhile, German and French PMI figures are due tomorrow and slated to show minimal improvements in the services and manufacturing sectors. Weaker than expected data from the euro zone could trigger a sharp breakdown for EUR/USD.
EUR/USD Technical Analysis at Area of Interest
For now though, the 1.3800 support and area of interest has been holding up well. The euro zone would need to release a set of very bleak reports to spur a convincing breakdown. If this happens, EUR/USD might make its way down to the next area of interest at the 1.3600 major psychological support zone.
On the other hand, strong data from the region might spark a quick rally. However, this is expected to be subdued as a short-term falling trend line can be drawn connecting the latest highs of the price action. EUR/USD might climb to the next area of interest near the 1.3900 barrier. Near term resistance is also evident at the 1.3850 minor psychological level.
While markets are still waiting for more clues regarding ECB monetary policy, EUR/USD might stay in consolidation above the current levels or below it.
To contact the reporter of the story: Marco Roemer at email@example.com