Key Takeaways:
• Euro remains vulnerable before the GDP release
• 1.2357 remains key support area
• Sentiment remains bearish but oversold
The Euro again fell against the US Dollar yesterday, dragging the price of EURUSD to less than 1.2450 ahead of the Eurozone growth data. The long term sentiment remains extremely bearish due to consistent Lower Low on the daily chart. The ongoing decline in the Euro price is the worst losing streak since 2010.
Technical Analysis
As of this writing, the pair is being traded around 1.2440. A support can be seen near the current levels i.e. the daily trendline ahead of 1.2400, the psychological number and then 1.2357, the swing low of the recent downside move as demonstrated in the following chart.
On the upside the pair is expected to face a hurdle near 1.2480, the 23.6% fib level ahead of 1.2556, the 38.2% fib level and then 1.2617 that is the 50% fib level. The bias remains bearish as long as the 1.2770 resistance area is intact.
Eurozone Growth
The EuroStat will release the Gross Domestic Product (GDP) report of the Eurozone on Friday. According to the median projection of different economists, the Eurozone grew at 0.1% in the third quarter as compared to 0.2% growth in the quarter before. Generally speaking, higher GDP reading is considered positive for the economy thus a worse than expected actual outcome will be seen as bearish for the pair and vice versa.
Trade Idea
Considering the oversold sentiment in the Euro price, buying the pair around the current levels still appears to be a good strategy in short term. A tight stop should however be placed at 1.2357.
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About Author
Usman Ahmed is Chief Currency Strategist at Capital Trust Markets (CTM). CTM is a New Zealand based regulated brokerage offering online trading services in currencies, metals and indices.