EURUSD and Euro crosses have vaulted higher, which in the former’s case has driven a move to a fresh three-week high of 1.1419 so far, after breaking 2-days peak and reaching R2 from daily PP analysis.
EURJPY has concurrently rallied to a two-month high, at 126.45, EURCHF has lifted out of intraday lows (the cross dropped quite sharply during the Asian session, and still remains net lower on the day), while EURGBP is trading higher in what is shaping up to be the first up day for this cross out of the last four days.
Perky German state inflation numbers in preliminary February data are in the mix of sentiment drivers, while the lowered perceived risk for a disorderly no-deal Brexit has also been cited in market narratives. With regard to the latter, Goldman Sachs, for instance, is putting 10% odds on for there being a no-deal Brexit, and 35% for a remain-in-the-EU scenario and 55% for a ratified and delayed Brexit. .
Momentum indicators along with the 3 consecutive bullish candles in the 1-hour chart, suggest that positive momentum has not run outof steam yet. RSI just crossed 70 barrier, while MACD lines extended further to the upside above signal line, both suggesting tha intraday outlook has turned from neutral to positive.
EURUSD next Resistance is at 1.1435 – 1.1450 ( R3 and the confluence of upper BB line and 38.2% Fib. level since September decline). Further gains above this area could trigger the attention to 1.1517, which coincides with the 200-day SMA and the 50% Fib. level. If the pair rerverse, then it could find immediate Support at 1.1380-1.1390 (20-period SMA). Losses below this area could retest 2-day low at 1.1360.
In the long term meanwhile, it can still be argued that the US economy is in relatively better shape than the Eurozone’s, incoming US data have been mixed and the Fed’s associated policy pause has eroded bullish arguments for the US currency. This said, there are caveats given concerns about a pending US tariff hike on automobiles imported from the Eurozone, along with signs of flagging growth momentum in Europe, particularly in the production sector.
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Andria Pichidi
Market Analyst
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