EURUSD Tests Key Support After Business Confidence News

The Euro (EUR) inched lower against the US Dollar (USD) on Wednesday, decreasing the price of EURUSD to less than 1.1350 following some key economic events. The technical bias has however turned bullish because of a higher high in the recent upside rally.

Technical Analysis

As of this writing, the pair is being traded near 1.1339. A hurdle may be noted around 1.1400 (a short-term horizontal resistance area as well as psychological number) ahead of 1.1445 (the high of the recent upside wave) and then 1.1500 (the psychological number).

On the downside, a support can be noted around 1.1132 (a key horizontal support) ahead of 1.0839 (the low of the last major downside move) and then 1.0800 (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 Business Confidence

Euro zone businesses lost some momentum in June but chalked up their best performance last quarter in over six years, according to surveys that showed companies started the second half of 2017 in rude health.

IHS Markit’s final composite Purchasing Managers’ Index for the euro zone was 56.3 in June, down from May’s 56.8 but comfortably beating a flash estimate of 55.7. It has been above the 50 mark that divides growth from contraction since mid-2013.

“The final headline PMI came in above the earlier flash estimate and consequently signalled only a very slight loss of growth momentum at the end of the second quarter,” said Chris Williamson, chief business economist at IHS Markit.

Trade Idea

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

usmanahmed7290@gmail.com'

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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