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James Hyerczyk

The Euro is trading flat against the U.S. Dollar on Thursday after recovering from early session weakness. The catalyst responsible for the rebound in the single-currency was a jump in German industrial output although gains are likely being capped by a dip in exports.

“The resilience of Germany’s economy helped to drive its biggest increase to industrial output in a year and a half in November, though declining exports made for mixed signals on Europe’s largest economy,” according to Reuters.

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At 12:13 GMT, the EUR/USD is trading 1.1112, up 0.0007 or +0.06%.

Industrial production jumped by 1.1% on the month, beating expectations for a 0.7% gain, figures from the statistics office showed, thanks largely to manufacturing growth and booming construction.

Germany’s export-dependent manufacturers are contending with sluggish demand from abroad as well as business uncertainty linked to trade disputes and Britain’s decision to leave the European Union, according to Reuters.

Trade figures also published on Thursday underlined the difficult outlook, with data from the statistics office showing November’s exports were down 2.3% month on month while imports edged down 0.5%, narrowing the trade surplus to 18.3 billion Euros ($20.3 billion).


Daily Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. The main trend will change to down on a trade through 1.1067. A move through 1.1313 will signal a resumption of the uptrend.

The minor trend is down. This confirms the shift in momentum to the downside. A trade through 1.1206 will change the minor trend to up.

The key retracement zone support is 1.1096 to 1.1045. This zone represents value so buyers could step in on a move into this area. It stopped the selling at 1.1067 on December 20. Earlier today, the selling stopped slightly above the upper or 50% level at 1.1096.

On the upside, the first retracement zone resistance level is 1.1146.


Daily Technical Forecast

Based on the early price action the direction of the EUR/USD the rest of the session on Thursday is likely to be determined by trader reaction to the 50% level at 1.1096.

Bullish Scenario

A sustained move over 1.1096 will signal the presence of buyers. The first target is an uptrending Gann angle at 1.1126.

Overcoming 1.1126 will indicate the buying is getting stronger. This could lead to another test of a 50% level at 1.1146.

Bearish Scenario

A sustained move under 1.1096 will indicate the presence of sellers. This could trigger an acceleration to the downside with the first target a main bottom at 1.1067.

Taking out 1.1067 will change the main trend to down. This could extend the break into an uptrending Gann angle at 1.1054 and a Fibonacci level at 1.1045.

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