Forex Focus
EURUSD was on a steady uptrend throughout Friday’s trading after opening at 1.1096. The currency pair reached a two-week high at 1.1186 before ending the week at 1.1173. As of this writing, EURUSD is up close to 20 pips from its open price as it trades around 1.1192.
There were no top-tier economic data released from the euro zone and the US on Friday. The bullish rally on the currency pair can be largely attributed to risk appetite that was sparked by updates on the US-China phase one deal. Remember that earlier last week, China announced that they were finalizing details of the initial agreement. There were also reports that China is getting ready for a signing ceremony once all the issues are ironed out.
Of course, there was also profit-taking. Investors have been re-balancing their portfolios after heavily buying US dollars in the last quarter of 2019.
For today, the Chicago PMI report for December is due at 2:45 pm GMT. The consensus is for the report to print an improvement in business conditions with the forecast higher at 48.2 than November’s 46.3 reading. Then at 3:00 pm GMT, pending home sales is eyed to show a 1.5% uptick in home sales compared to a year ago.
Worse-than-expected figures could raise concerns about the health of the US economy. If this happens, EURUSD could rally even further.
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When you connect the highs of September 24, 2018, June 27, 2019, and December 17, 2019, you can see that EURUSD is trading above the resistance at the falling trend line. Buyers will need to clear the minor resistance around 1.1200 where EURUSD peaked in August 2019. A strong bullish close above this price would mean that the next resistance level for the currency pair to test will be 1.1400 where EURUSD made highs on June 25, 2019.
However, if sellers dominate trading in the next few days, we could see a pull back to 1.1140. This price coincides nicely with the 50% Fib level when you draw the Fibonacci retracement tool from the low of December 20 to today’s Asian session highs. On top of that, this price also aligns with the broken falling trend line which may also provide EURUSD with support. If there are not enough bids at this price the next near-term support will be at the currency pair’s December 20 lows at 1.1065.