On Wednesday morning the EUR/USD had stopped its decline and surged back up to the levels above the 1.1350 mark.
Although, the pair already on Tuesday reached the previously set target of the zone below the 1.1340. Namely, it touched it during the second half of Tuesday's trading and immediately began a surge, which reached as high as 1.1375.
The European Single Currency appreciated against the US Dollar, following the US PPI and Core PPI release last Tuesday at 13:30 GMT. The EUR/USD exchange currency rate gained 5 pips or 0.05% during a minute, right after the release. The European Single Currency kept going upwards after the data release to continue trading at the 1.1440 area against the US Dollar.
The Bureau of Labor Statistics released US PPI data lower-than-expected of negative 0.2% compared with forecasted 0.01%. Note, that the US Core PPI was released at the same time with the US PPI.
The Bureau of Labor Statistics said in a note, "Lower energy prices sent the producer price index (PPI) down 0.2% in December. Prices for services ticked down 0.1%, but are up 2.8% over the past year—the strongest pace this expansion. The sharp drop in oil prices over the fourth quarter has pulled down energy input costs for a second straight month."
Quiet week for fundamentals
As it is accustomed, the third week of the month is expected to be rather empty for macroeconomic data releases. Although, there are a couple of releases to look forward to this week.On Wednesday, look forward to the Canadian Retail Sales data release at 13:30 GMT. This event most likely will be the only one notable enough during the rest of the week to be traded by currency release traders.
On Thursday, main attention of fundamental event traders will be on the ECB Rate Announcement at 12:45 GMT. The volatility on the EUR charts usually increases during the ECB Press Conference, which will start at 13:30 GMT.
Meanwhile, oil traders will most likely catch a one percent move at 15:30 GMT. The data release has been providing moves of more than one percent during the last month and a half.
EUR/USD daily review
On the hourly chart the EUR/USD was testing the resistance of the junior descending pattern. Meanwhile, note that the trend line was already pierced during the morning hours before once more returning below it.In general, the rate has two scenarios. If it passes the resistance of the 55-hour SMA and the trend line, it will most likely surge up to the 100-hour SMA at 1.1375 and afterwards to the 1.1400 mark.
On the other hand a decline might take place to properly confirm the lower trend line of a dominant ascending pattern. In that case the rate might only find technical support only near the 1.1330 mark.
Hourly Chart
On the daily chart the ascending pattern can be observed more clearly. You can see that the support line of the EUR/USD is based on three previous low levels that were touched during the end of 2018.
In accordance with the pattern the rate is expected the surge. Although, it will face a strong resistance level at the 1.1400 level, where three technical levels are located at.
Daily chart
Traders continued to be short on EUR/USD despite the surge, as 56% of open positions were short on Wednesday.
Meanwhile, trader pending orders in the 100-pip range were no longer neutral. They were set to buy, as 54% of all pending EUR/USD orders on the Swiss Foreign Exchange were set to sell.
In general, it can be seen that the shorts are still held, but during the surge the pair has come closer to the stop losses of the short positions. Most likely the buy orders are set to be executed above the 55 and 100-hour simple moving averages.