EURUSD continues to tread higher, moving inside an ascending channel visible on its 1-hour time frame. Price is just testing the resistance and could be due for a pullback to support before heading further north.
The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. These moving averages are in line with the mid-channel area of interest, also acting as a potential floor in the event of a pullback.
Stochastic is on the move down to suggest that sellers are trying to take control of price action. This could allow EURUSD to retreat until the 1.0550 minor psychological level or at least until 1.0600 before making another test of the resistance around 1.0700.
Economic data from the euro zone came in better than expected last Friday, as the German WPI printed a 1.2% gain versus the projected 0.3% uptick. This was also stronger than the earlier 0.1% gain, indicating upside pressure on overall inflation.
Meanwhile, US data was mixed as core retail sales and PPI fell short of estimates while the headline figures surpassed expectations. Headline retail sales rose by 0.6% versus the estimated 0.5% gain while headline PPI was up 0.3% versus the projected 0.1% uptick. Preliminary UoM consumer sentiment dipped from 98.2 to 98.1 instead of improving to 98.6.
Euro zone trade balance is due today but traders might hold out for the ECB statement later on this week or UK PM May’s Brexit speech. Any indication that a “hard Brexit” might be underway could also dampen demand for the shared currency. US banks are closed for Martin Luther King Day today.
By Kate Curtis from Trader’s Way