Technical Analysis EUR/USD for February 4, 2016

The EUR/USD broke out on Wednesday surging above resistance near the 200-day moving average at 1.1051, which is now seen as solid support. Resistance is now seen near the October highs at 1.1495. The move came following a softer than expected U.S. ISM services report, which allowed the 10-year U.S. yield to hit 1.8%. Momentum has turned positive as the MACD (moving average convergence divergence) index generated a buy signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread.

U.S. ISM services index fell 2.3 points to 53.5 in January after sliding 0.8 points to 55.8 in December. It’s a third month of slowing activity and is the lowest reading since February 2014. The employment index dropped to 52.1 from 56.3. New orders declined to 56.5 from 58.9 (revised from 58.2). Prices paid slumped to 46.4 from 51.0.