The EURUSD currency pair gears up for an eventful end to the week with a slew of data releases on the horizon. Thursday saw the Eurozone kickstarting the influx of releases, unveiling inflation statistics from France and Spain. In France, the year-over-year inflation rate surpassed expectations, hitting 2.9% compared to the prior 3.1%.
Similarly, Spain witnessed a slowdown in year-over-year inflation from 3.4% to 2.8%, still outpacing market forecasts. These bullish inflation figures initially bolstered the Euro, only to be met with a twist from Germany’s latest labour data. The unemployment change in Germany exceeded forecasts, rising by 11K instead of the expected 7K, causing the German unemployment rate to climb from 5.8% to 5.9%, contrary to market consensus. As we progress, attention turns to the eagerly anticipated US PCE data later today, alongside forthcoming German inflation statistics before Eurozone inflation figures on Friday.
Technical
On the 1D chart, a breakout has emerged from the descending channel formation. Resistance was met at 1.0853, where a retracement was initiated. Since then, the support at 1.0797, backed by the 25-SMA (green line), has held to confirm the breakout. If the pair can clear the resistance at 1.0853 in the upcoming sessions, a sustainable uptrend could emerge if the fundamentals align.
If the resistance gets cleared, the pair could look to the 50-SMA (blue line) as the first resistance near 1.0876. The Fibonacci midpoint at 1.0916 could be the next hurdle to cross before the 61.8% Fibonacci golden ratio comes under the spotlight at 1.0968. These levels could be challenging to cross and could enforce a pullback in the future.
However, another pullback could occur if the resistance at 1.0853 once again prevents additional upside. In this case, any movement below the 1.0797 support level could trigger another leg down toward the demand zone near 1.0744. Neckline support at 1.0695 could then come under the spotlight if the bearish momentum persists.
Summary
The EURUSD currency pair could have an eventful end to the week as it navigates multiple data releases. Resistance at 1.0853 could be worth watching in the upcoming session to determine whether the potential uptrend could be sustained.
Sources: Koyfin, Tradingview, Reuters
Piece written by Tiaan van Aswegen, Trive Financial Market Analyst
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