EURUSD Poised for Bearish Reversal amid Eurozone Consumer Confidence News

The Euro (EUR) inched lower against the US Dollar (USD) on Wednesday, decreasing the price of EURUSD to less than 1.1950 following some key economic events. The technical bias has however turned bullish because of a higher high in the recent upside rally.

EUR/USD Technical Analysis

As of this writing, the pair is being traded near 1.1943. A hurdle may be noted around 1.2000 (a short-term horizontal resistance area as well as psychological number) ahead of 1.2076 (the low of 2010) and then 1.2100 (the psychological number).

eurusd-d1-ava-capital-markets1

On the downside, a support can be noted around 1.1732 (a key horizontal support) ahead of 1.1639 (the low of the last major downside move) and then 1.1600 (the confluence of horizontal support as well as psychological number) as demonstrated in the given above chart. The technical bias shall remain bullish as long as the 1.0839 support area is intact.

Eurozone Consumer Confidence

The European Commission’s Eurostat arm reported the economic sentiment indicator for the euro area rose to 111.9 in August from a revised 111.3 the previous month and beating the consensus forecast of 111.3. Confidence in industrial and services businesses both improved more than forecast, while consumer confidence increased, though retail and construction indicators showed worse readings.

The ESI increased in three of the five largest euro-area economies, with Italy up 3.6, France 1.7 and Spain 1.4, while it eased 0.6 in Germany 0.9 in the Netherlands. For the European Union as a whole there was a slight reduction in economic sentiment to -0.3, which was mainly due to the worsening sentiment in the largest non-eurozone economy, the UK.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels may be a good strategy in short to medium term.

 

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Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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