EUR/USD failing at 21-hourly SMA, where next?
- EUR/USD capped at 21-hourly SMA at 1.2244.
- ECB policymakers a driver.
Retreating from a fresh multi-year high above 1.23, capped at the 21-hourly SMAa nd weighed by mixed comments from ECB policymakers, EUR/USD trades on the soft side, currently, trading at 1.2229, down -0.31% on the day, having posted a daily high at 1.2324 and low at 1.2196.
While markets await next week's ECB presser, we have heard from Constancio (ECB VP), Villeroy (France) and Nowotny (Austria) who have all expressed concern about euro strength and its impact on inflation.
ECB meeting will be crucial
However, Bundesbank President Weidmann has pushed back on expectations for rate increases and the recent pop in EUR/USD after those bullish minutes from December has been capped while political uncertainties around the German coalition talks remain. As for data, the final CPI data were released, confirming euro area headline inflation at 1.4% y/y with core remaining in sub-1% territory at 0.9% y/y.
EUR/USD levels
Analysts at Scotiabank explained that the EUR’s daily candle chart is throwing off of a growing number of worrisome signals"
"Firstly, we highlight Tuesday’s ‘hanging man’ doji, typically observed at the end of an uptrend. Secondly, we note the potential completion of a bearish ‘evening star’ reversal formation, set to be confirmed on a close below the midpoint of Monday’s bullish candle (1.2230). And third, we note the potential for a bearish outside range. EUR’s momentum signals are bearish and in overbought territory. Near-term support appears limited between 1.2200 and 1.2120," the analysts added.