MAs Keeping EUR/USD Subdued

EUR/USD has been on a downtrend for two months now and it broke below 1.07 early last week after the strong US CPI inflation report but reversed higher as the USD turned bearish and crawled almost 100 pips higher until yesterday, but the 100 SMA is acting as resistance at the top, keeping the price subdued and pushing the highs lower.

Yesterday, it was the President’s Day holiday in the US, and trading in EUR/USD continued at a slow pace. Most of the day was marked by consolidation, with the 100-day moving average acting as resistance for this forex pair, restricting its upward momentum. Investor interest in EUR/USD was limited, and it closed the day mostly unchanged around the 1.0780 regions. The pair remained within a tight range of 30 pips, as there were no significant events on the macroeconomic calendar, and both US and Canadian markets were closed due to local holidays.

Last week, the Eurozone Flash Estimate GDP Report for Q4 was released, showing that the Eurozone’s GDP remained unchanged at 0.0%, in line with expectations. This reading matched the first reading for Q4 GDP, which was also 0.0%. In the previous quarter (Q3), the Eurozone GDP had contracted by 0.1%. So, the Eurozone officially missed the recession.

But the Buba Monthly Report from the Deutsche Bundesbank showed yesterday that the economy may be experiencing a recession. The report cited that the demand from abroad remains soft, consumption is subdued, and investments remain cautious as contributing factors to the economic downturn.

So, this will likely keep EUR/USD soft, unless there is a change in the USD side. Otherwise, fundamentals seem pretty bearish for this forex pair and we should see further downside in the coming days, as moving averages continue to act as resistance on the H4 timeframe. According to this analysis, we opened a sell EUR/USD signal yesterday, targeting 1.07 lows.

EUR/USD Live Chart