EUR/USD Bulls to Target $1.0850 on German Consumer Confidence
It is a relatively quiet day ahead for the EUR/USD. The German and French economies will be in the spotlight, with the German GfK Consumer Confidence and French consumer confidence figures in focus.
After improving consumer confidence in Italy, investors will likely expect a similar trend to support consumption and the ECB’s more optimistic economic outlook for the euro area. While the numbers from Germany tend to have more influence, strikes across France and weak consumer confidence figures would test EUR/USD support at current levels.
With consumer confidence in focus, investors should also monitor ECB member speeches. Executive Board member Isabel Schnabel will speak today. Forward guidance on monetary policy intentions would move the dial.
EUR/USD Price Action
This morning, the EUR/USD was down 0.05% to $1.08366. A mixed start to the day saw the EUR/USD rise to an early high of $1.08495 before falling into the red.
The EUR/USD needs to avoid the $1.0829 pivot to target the First Major Resistance Level (R1) at $1.0862. A move through the Tuesday high of $1.08485 would signal a bullish session. However, the EUR/USD needs hawkish ECB chatter and better-than-expected consumer confidence numbers to support a breakout session.
In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0882 and resistance at $1.09. The Third Major Resistance Level (R3) sits at $1.0936.
A fall through the pivot would bring the First Major Support Level (S1) at $1.0809 into play. However, barring a data-fueled sell-off, the EUR/USD pair should avoid sub-$1.075. The Second Major Support Level (S2) at $1.0775 should limit the downside. The Third Major Support Level (S3) sits at $1.0721.
Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The EUR/USD sits above the 50-day EMA ($1.07746). The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA widening from the 200-day EMA, delivering bullish signals.
A hold above the Major Support Levels and the 50-day EMA ($1.07746) would support a breakout from R1 ($1.0862) to give the bulls a run at R2 ($1.0882) and $1.09. However, a fall through S1 ($1.0809) would bring S2 ($1.0775) and the 50-day EMA ($1.07746) into play. A fall through the 50-day EMA would send a bearish signal.
The US Session
Looking ahead to the US session, it is a quiet day on the US economic calendar. The housing sector will be in the spotlight, with pending home sales due out. With the markets focused on Fed monetary policy intentions, the figures should have limited influence on the EUR/USD pair.
However, the second day of testimony on Capitol Hill and Fed chatter could move the dial. Warnings of a credit crunch would weigh on the EUR/USD.
Investors should also monitor Fed chatter on monetary policy and the US economy.