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EUR/USD Triangle Breakout – Is It Good Time to Short?

Posted Wednesday, March 17, 2021 by
Arslan Butt • 3 min read

The EUR/USD pair closed at 1.1900 after placing a high of 1.1953 and a low of 1.1882. The currency pair EUR/USD dropped on Tuesday and extended its losses for the third consecutive session amid the US dollar’s strength ahead of the US Fed meeting despite the supportive and better-than-expected macroeconomic data from Eurozone. The European economy’s outlook was not improving due to the steady surge in the new cases of coronavirus in the bloc. The EU countries like Italy, France, Germany, and Poland saw a spike in coronavirus infection rate after the third wave of COVID-19 swept across the region. The EU economy was already facing sluggish vaccination campaign problems. The third wave of coronavirus added more pressure on it that ultimately forced countries to add new restrictions to curb the rising infection rate.

These restrictions affected the European Union economy’s outlook that ultimately add pressure on the single currency Euro and keep the currency pair EUR/USD under pressure. The traders were more concerned about the Eurozone economy’s outlook that they almost ignored the stronger-than-expected macroeconomic data from the Eurozone and weaker-than-expected data from the US. Given the economic figures released on Tuesday, the currency pair should have reversed its direction. Still, market players kept their focus on the US Fed meeting and the growing fears of the impact on the Eurozone economy due to the third wave of coronavirus.

On the data front, at 12:45 GMT, the French Final CPI for February raised to 0.0% against the expected -0.1% and supported the single currency Euro and capped further losses in EUR/USD. At 15:00 GMT, the ZEW Economic Sentiment for the whole bloc also raised to 74.0 against the projected 72.0 and supported Euro and limited the pair’s downfall. For March, the German ZEW Economic Sentiment also surged to 76.6 against the expected 74.0 and supported the single currency Euro and capped further losses in this pair.

From the US side, at 01:00 GMT, the TIC Long Term Purchases fell to 90.8B against the projected 107.3B and weighed on the US dollar and capped further downward momentum in EUR/USD. At 17:30 GMT, the Core Retail Sales for February also fell to -2.7% against the forecast of 0.2% and weighed on the US dollar and limited the pair’s losses. In February, the Retail Sales also fell to -3.0% against the anticipated -0.5% and weighed on the US dollar. In February, the Import Prices surged to 1.3% against the projected 1.1%, supported the US dollar, and added to further losses.At 18:15 GMT, the Capacity Utilization Rate for February declined to 73.8% against the estimated 75.6% and weighed on the US dollar. In February, the Industrial Production also dropped to -2.2% against the projected 0.4% and weighed on the US dollar and capped further downward momentum in EUR/USD. At 19:00 GMT, the Business Inventories for January remained flat with the forecasts of 0.3%. The NAHB Housing Market Index also fell to 82 against the anticipated 84 and weighed on the US dollar and limited losses. Meanwhile, on Tuesday, the Greek Finance Minister Christos Staikouras offered the basic reforms and investments of the National Plan for Revival and Resilience at the ECOFIN meeting. This plan is expected to use about 32 billion euros from the EU recovery fund that has been allocated to Greece. The plan will emphasize green and digital transformations by leveraging private sector funding.

EUR/USD Triangle Breakout - Is It Good Time to Short?
Daily Technical Levels
Support Resistance
1.1902 1.1959
1.1878 1.1992
1.1845 1.2016
Pivot Point: 1.1935The EUR/USD pair is trading with a slight selling bias at the 1.1900 level, having violated the support area of 1.1915 level. On the lower side, the pair can find support at 1.1869 and 1.1839 area along with resistance level of 1.1915 and 1.1954 level. Overall, EUR/USD seems to have a bearish breakout, and it may extend its selling trend today, but most of the market movement will depend upon the release of FOMC. The bearish bias is likely to dominate today. Good luck!
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