After being under pressure for seven consecutive weeks, the American dollar managed to change course against the common currency, and the EUR/USD pair closed the week around 1.0630, its lowest settlement in almost a month. Renewed hopes about the US government applying policies to boost growth and inflation, after President Donald Trump promised a “phenomenal” tax reform, was behind dollar’s strength. The American currency advance was uneven across the board, with the Pound and the Aussie the most reluctant to give up. The EUR on the other hand, is among the most vulnerable, given the ongoing political woes in the region, with upcoming elections in Germany and France, a possible referendum in Italy, and Greece’s bailout on “shaky ground,” according to the European Commission President Jean-Claude Juncker.
The week with probably start in slow motion, with no major data scheduled in Europe and America. That said, political headlines could continue to affect currencies one way or the other. From a technical point of view, the EUR/USD pair´s daily chart shows that, after reaching the 50% retracement of the November/January decline, the pair is back below the 38.2% retracement of the same decline and poised to test the next Fibonacci support at 1.0565. Technical indicators in the mentioned time frame head sharply lower within negative territory, whilst the price is below its 20 and 100 DMAs, this last with a strong downward slope around 1.0700. In the shorter term, and according to the 4 hours chart, technical readings also favor the downside, as a bearish 20 SMA kept capping the upside, currently around 1.0660, whilst the Momentum indicator turned south after failing to overcome its mid-line, and the RSI indicator consolidates around 38.
Support levels: 1.0620 1.0590 1.0565
Resistance levels: 1.0660 1.0710 1.0750