The Euro (EUR) extended upside movement against the US Dollar (USD) on Monday, increasing the price of EURUSD to more than 1.1200 following the release of some key economic news. The technical bias, however, remains bearish because of a Lower High (LH) in the recent upside rally on the four-hour timeframe.
As of this writing, the pair is being traded near 1.1229. A hurdle can be seen around 1.1250, the horizontal resistance area ahead of 1.1279, the swing high of the latest major upside rally and then 1.1300, the psychological number.
On the downside, the pair is expected to find a support around 1.1204, a major horizontal support area ahead of 1.1181, another key horizontal support and then 1.1153, the swing low of the latest major downside move as demonstrated in the above chart. The technical bias will remain bearish as long as the 1.1279 resistance area is intact.
Consumer prices in the eurozone were 0.4 per cent higher in September than a year earlier, according to the figures from Eurostat, the EU’s statistics agency, which were released on September 30. That was a pickup in the annual rate of inflation from 0.2 per cent in August. Eurozone inflation accelerated to the fastest rate since late 2014, but it is still well below the European Central Bank’s target of just below 2 per cent, despite a series of stimulus packages launched by the ECB to boost demand across the 19-nation euro area. The ECB, therefore, is likely to announce in December an extension of its QE programme beyond its scheduled end-date of March 2017.
Considering the overall technical and fundamental outlook, selling the pair on short-term rallies still appears to be a good strategy in near term.