Chart of the Day EURUSD

Pivot Point Cluster EURUSD

The EUR remains on the soft side. German political uncertainty increased, after the expected successor to Chancellor Merkel stepped down as CDU leader. EUR got through that news largely unscathed but lurched down several hours later, reaching a low of around 1.0910

Eurozone investor sentiment eased in February: The Sentix Investor Confidence Index came in at a lower 5.2 in February (Jan: 7.6), below analysts’ estimate of 5.7. Details show that investors became less optimistic over both current situation and expectations after the Coronavirus outbreak situation deteriorated this month. The index had climbed to a two-year high in January as investors cheered the recently signed US-China trade deal that brightened global trade outlook.

In the US, Fed Chair Powell will give his semi-annual testimony to the lower house of Congress. He is likely to repeat his recent comments that the economy is in ‘a good place’ and that the hurdle for further policy action is high. However, he has also expressed some frustration that inflation continues to run below target.  So it will be interesting to see whether he has anything more to say on this. He could be asked about the potential economic impact of the coronavirus.

ECB President Lagarde also speaks today. Lagarde will probably have to acknowledge recent poor Eurozone data when she addresses the European Parliament, which may cause her to again call for more fiscal stimulus. The USD is close to the top end of its recent range against the euro reflecting strong US economic data and weak data in the Eurozone. Powell and Lagarde’s comments will be followed closely watched as potential catalyst for a correction in that trend

From a technical and trading perspective, having eroded the more obvious weekly trendline the EURUSD is close to completing a near term intraday trend cycle (11 swing set up), this cycle completion is potentially significant as it will likely see a test of the significant PivotPoint confluence (Yearly,Monthly,Weekly and Daily pivot cluster) this area also represents a larger daily time frame equidistant swing target and a potential double bottom. Bulls will be patiently waiting to see how price responds from this level, looking for intraday or daily reversal patterns to set long positions initially targeting a move to test back offers and stops above 1.10, with the potential for a more meaningful to be carved out over the coming sessions

 

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