EUR/USD ANALYSIS
- US Total Vehicle Sales stays weak.
- ECB doves to talk.
- All eyes on US CPI.
- Technical evaluation hints to bullish EUR/USD setup.
- IG Client Sentiment factors to short-term hesitancy.
EURO FUNDAMENTAL BACKDROP
The Euro opened up barely larger towards the U.S. greenback this morning after a poor exhibiting on the US car gross sales entrance for the January interval. Total gross sales declined for a 3rd straight month (see graphic beneath). The declining nature of the info has been largely attributable to automotive chip shortages main to produce constraints however nonetheless a destructive for the dollar.
US TOTAL VEHICLE SALES (JAN)
Source: DailyFX Economic Calendar
Yesterday, the ECB’s Schnabel didn’t do a lot in the way in which of easing market expectations stating “Monetary policy, for its part, cannot afford to look through energy price increases if they pose a risk to medium-term price stability.” On the docket right now, ECB board members Guindos, Lane and Villeroy are scheduled to talk. Traditionally geared in the direction of the dovish stance, we may even see some downward strain on the Euro ought to they preserve their historic viewpoints.
As talked about in yesterdays’ evaluation, US inflation is the main target of the day (see calendar beneath) and should possible overshadow the aforementioned ECB feedback. A launch larger than anticipated will possible end in a transfer decrease on EUR/USD whereas a miss might see Euro bulls flood the market.
Source: DailyFX Economic Calendar
TECHNICAL ANALYSIS
EUR/USD DAILY CHART
Chart ready by Warren Venketas, IG
The day by day EUR/USD chart above could also be laying the muse for a US CPI miss later right now with the bullish EMA crossover (blue) underway whereas value motion could also be revealing a breakout from the short-term falling wedge formation (black).
Resistance ranges:
Support ranges:
- 1.1400/100-day EMA
- 50-day EMA/20-day EMA
- 1.1300
IG CLIENT SENTIMENT DATA CAUTIOUS
IGCS exhibits retail merchants are presently brief on EUR/USD, with 59% of merchants presently holding brief positions (as of this writing). At DailyFX we usually take a contrarian view to crowd sentiment nonetheless, the current change in lengthy and brief positioning end in a combined bias.
Contact and comply with Warren on Twitter: @WVenketas
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