EUR/USD Bears Target a Return to Sub-$1.07 on Fed Fear

It is a relatively busy day ahead for the EUR/USD. Early in the European session, the German economy will be in focus, with industrial production numbers for December due out.

Following better-than-expected factory order numbers on Monday, the markets will likely forgive weaker-than-forecasted numbers. Economists forecast industrial production to fall by 0.7% following a 0.2% increase in November.

Other stats include trade data from France and industrial production figures for Spain. However, the numbers are unlikely to impact the ECB’s policy goals or the EUR/USD.

Investors do need to consider ECB member speeches. ECB Board Member Isabel Schnabel will speak later today. However, Schnabel will need to deviate from the current ECB script to move the dial.

The ECB will release the Consumer Expectations Survey, which will draw interest.

EUR/USD Price Action

At the time of writing, the EUR was up 0.02% to $1.20277. A mixed start to the day saw the EUR/USD fall to an early low of $1.07217 before rising to a high of $1.20277.

Technical Indicators

The EUR/USD needs to move through the $1.0745 pivot to target the First Major Resistance Level (R1) at $1.0780 and the Monday high of $1.07989. A return to $1.0750 would signal a bullish session. However, the EUR/USD would need the stats and ECB member chatter to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0834. The Third Major Resistance Level (R3) sits at $1.0924.

Failure to move through the pivot would leave the First Major Support Level (S1) at $1.0690 in play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0650. The Second Major Support Level (S2) at $1.0655 should limit the downside.

The third Major Support Level (S3) sits at $1.0565.

Looking at the EMAs and the 4-hourly chart, the EMAs send a more bearish signal. The EUR/USD sits below the 200-day EMA ($1.07527). The 50-day EMA closed in on the 100-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bearish signals.

A move through the 200-day EMA ($1.07527) and R1 ($1.0780) would give the bulls a run at the 100-day EMA ($1.08324) and R2 ($1.0834). However, failure to move through the 200-day EMA ($1.07527) would leave the Major Support Levels in play. A move through the 50-day EMA would send a bullish signal.

The US Session

It is a quiet day on the US economic calendar. US trade data for December will draw interest early in the US session. However, there would need to be a marked widening in the US trade deficit to spook investors. With US stats on the lighter side, post-US Jobs Report FOMC member commentary will need consideration.