- Summary:
- EURUSD extended its gains as market sentiment was buoyed by optimism on the US-China Phase One Deal. Will it be enough to push EURUSD beyond the 100 SMA?
EURUSD extended is gains yesterday as it found bids during the European session. The currency pair steadily traded higher after finding support at 1.1113 and peaked at 1.1146. By the end of the New York session, EURUSD had settled at 1.1132 with a 22-pip gain.
Market Sentiment Buoyed by US-China Deal
The euro gains can mostly be attributed to the market’s general sense of risk appetite. Market sentiment has been on the positive side on renewed optimism for the US-China Phase One Deal. The latest news is that the Chinese delegation led by Chinese Vice Premier Liu He has arrived in the US. It is said that the two countries will sign the deal on Wednesday. There are speculations that the China will buy 200 billion USD worth of US goods from the energy, agriculture, and services sectors.
News surrounding the trade deal will likely continue to dominate market sentiment. So keep tabs on our site as we provide you with updates.
US CPI Due Today
For today, movement on the currency pair has been muted with the pair trading within a 10-pip range. There are no reports out of the euro zone scheduled. Meanwhile, the US CPI is due for release at 1:30 pm GMT. Both the headline and core CPI figures are eyed at 0.2%. Better-than-expected numbers could be bullis for the dollar and drag EURUSD lower. On the other hand, disappointing reports could dampen demand for the dollar and push EURUSD higher.
Read our Best Trading Ideas for 2020.
EURUSD Outlook
On the hourly time frame on EURUSD, we can see that the currency has been trending upwards. It has been making higher highs and higher lows since January 10. In fact, when you connect its recent lows, a rising trend line becomes apparent. EURUSD looks to be testing support at the said trend line and the series of dojis could mean that buyers are priming to push the currency pair higher.
However, be warned that on the 4-hour chart, EURUSD is currently testing resistance at the 100 SMA. A strong bullish close is needed around 1.1145 before the currency pair could rally to its January 6 highs at 1.1200.
On the other hand, a strong bearish close below the trend line could point to more selling ahead. There’s near-term support at yesterday’s lows at 1.1110. If it does not hold, you can look to January 10 lows at 1.1085 as the next floor.