EUR/USD Breaks Over Downward Trendline – Brace for a Bullish Trade! 

The EUR/USD pair closed at 1.2120, after placing a high of 1.2144, and a low of 1.2108. The EUR/USD prices extended their gains for the fourth consecutive session on Wednesday, reaching the highest level in a week, on the back of the weaker US dollar and the improved market mood. The greenback was on the backfoot on Wednesday, due to a flat US Dollar Index and the US Treasury yields, which were down on the 10-year note, due to high appeal for riskier assets, as the global market mood has improved since the rollout of  coronavirus vaccines in more countries around the world.

Furthermore, the US dollar was also weak because of the release of the latest US Consumer Price Index data, which fell against the forecasts in January, weighing on the greenback. The weakness of the US dollar remained the main driver of the EUR/USD pair on Wednesday, as investors ignored the weak French Industrial Production data release from Europe and continued buying the EUR/USD pair on the day. At 12:00 GMT, the German Final CPI for January came in, remaining flat, in line with the projections of 0.8%. At 12:45 GMT, the French Industrial production for December was released, indicating a decline to -0.8%, against the projected 0.4%, which weighed on the Euro and capped any further upside momentum in the EUR/USD pair.

From the US side, at 18:30 GMT, the Consumer Price Index for January came in flat, in line with the projections of 0.3%. In January, the Core CPI dropped to 0.0% against the projected 0.2%, weighing on the US dollar and pushing the EUR/USD pair higher. At 20:00 GMT, the Final Wholesale Inventories for December were released, showing a drop to 0.3%, against the projected 0.1%, which put pressure on the US dollar and added to the gains in the EUR/USD pair on Wednesday.

On the other hand, the President of the European Central bank, Christine Lagarde, said that this was not the time to slow down the fiscal support. Lagarde added that the ECB could scale up the Pandemic Emergency Purchase Program (PEPP) and raised prospects that the gains in the Euro could be limited. Meanwhile, the gains in the EUR/USD currency pair were limited on Wednesday, after European Commission President Ursula von der Leyen said that the EU had been tardy in authorizing coronavirus vaccines and was still far from the desired level. She also acknowledged that the EU had been overconfident about production targets being met amid delays at factories. The Commission Chief came under fire, due to the fact that the bloc has fallen behind countries like the UK, where more than 12 million people have already received their shots.

On Thursday, Euro traders will be awaiting the release of European Central Bank Vice-President Luis De Guindos’ speech. Any downbeat comments about the Eurozone economy would be negative for the shared currency. US Dollar traders will be awaiting the publication of the latest US Initial Jobless Claims data for February. If it continues to rise, then the US dollar is likely to decrease, which will lift the EUR/USD exchange rate higher.

Daily Technical Levels

Support             Resistance

1.2068               1.2145

1.2017                1.2173

1.1990               1.2223

Pivot Point:     1.2095

The EUR/USD continues to trade sideways, within a narrow trading range between 1.2112 and 1.2140. Violation of this range could drive further movement in the market. A bearish breakout at the 1.2112 level could lead the EUR/USD price towards the next support area of 1.2080, where the 50 periods EMA is likely to extend support to the pair. Conversely, a breakout at the 1.2144 level could extend the buying trend until the 1.2175 level. A mixed bias is likely to prevail today, until the breakout occurs. Good luck!