Bearish view
- Sell the EUR/USD pair and set a take-profit at 1.1670.
- Add a stop-loss at 1.1817.
- Timeline: 1-2 days.
Bullish view
- Buy the EUR/USD pair and set a take-profit at 1.1817.
- Add a stop-loss at 1.1670.
The EUR/USD pulled back as volume started rising after last week’s New Year celebrations. It retreated to a low of 1.1720, a few pips below last week’s high of 1.1817. It will likely start its volatility after the recent events in Venezuela and as traders wait for key macro data from the United States and Europe.
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US and Europe to Publish Key Macro Data
The EUR/USD exchange rate pulled back as traders reacted to the weekend events in which the United States conducted a regime change in Venezuela, with Trump saying that US officials will run the country for a while.
The pair also pulled back as investors waited for the upcoming macro data from the US and Europe. Economists expect the forthcoming data to show that the US manufacturing PMI rose slightly from 48.2 in November to 48.3 in December.
If this estimate is accurate, it will mean that the sector continues to contract, a trend that has been going on since February last year. This contraction is also visible in the monthly jobs report, which has showed that manufacturing payrolls have shrunk since May last year.
The other key macro data this week will come out on Tuesday when S&P Global will publish the latest manufacturing PMI numbers from the US and the European Union. These numbers will provide more information about the economic growth of the two regions.
Eurostat, the statistics agency for the European Union, will publish the flash consumer inflation report for December. Economists expect the data to show that the headline Consumer Price Index (CPI) remained unchanged at 2.1%, while core CPI remained at 2.4%.
The most important macro data this week will be the US labor numbers. ADP will go first with its December jobs report, which is expected to show that the economy created 50k jobs in December. The Bureau of Labor Statistics (BLS) will publish the latest job vacancy number.
Finally, the BLS will release the official jobs report on Friday, with analysts anticipating the data to show that the economy added 55,000 jobs in December.
EUR/USD Technical Analysis
The daily chart shows that the EUR/USD pair has pulled back in the past few days. It has dropped from a high of 1.1817 on December 24 to the current 1.1720.
The pair remains slightly above the key support at 1.1673, its highest point on October 29. It also remains above the 50-day Exponential Moving Average (EMA.
The pair’s rally is also supported by the Supertrend indicator, which is a bullish sign. Therefore, the pair will likely retreat to the support at 1.1673 and then resume the uptrend to last month’s high of 1.1817. A move above that level will point to more gains to the resistance at 1.1920.
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