What’s the Next Key Support for EUR/USD?

What's the Next Key Support for EUR/USD?

EUR/USD has been bearish and continues to be so this week. Let’s review the fundamental factors so far, look at where EUR/USD might find support, and get ready for Friday’s NFP.

This week, we got German inflation data, which was flat in December over November. Euro Area CPI came in at -0.2% year-over-year in December. Falling energy prices is the main reason, but even so, the overall inflation picture remains subdued and is a major reason the ECB continues to consider full-scale QE. ADP employment change for December came in at 241K, above the forecast of 227K, and above November’s 227K print which was revised up from 208K.

The combination of data should keep pressure on the EUR/USD, which has room to 1.1638, 2005-low. The NFP is due Friday and as long as price closes the week below 1.20, it remains bearish going into next week. if price gets to the 2005-lows, we should expect support since the monthly RSI is in oversold territory, and the trend seen in the monthly chart is sideways.

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Fan Yang has been a professional forex trader and analyst since 2007. He specializes in technical analysis and has a Chartered Market Technician designation since 2011. He was the chief technical strategist at CMSFX He was also the founder and chief currency strategist at FXTimes Over the years, Fan has not only been a trader and analyst but also an educator. As a proponent of both technical and fundamental analysis in trading, Fan advocates simplicity and discipline as key factors in making trading decisions when faced with so many "clues" and "signals". Currently Fan Yang is the chief currency analyst and webinar instructor at forexminute.com.