The euro ended the day virtually unchanged against the U.S. dollar after it fell to a low of 1.0620. German inflation came in slightly below forecast, easing pressure on the European Central Bank to unwind its stimulus program. The greenback is however in a state of limbo as Donald Trump’s order on immigration overshadowed his promises to pursue pro-growth policies. Instead, the focus has been recently on trade and immigration. The dollar however, outperformed the pound sterling which fell towards 1.2465, providing a good profit for short traders. As the 1.2470/60-level is considered a major support we shall wait for prices below that support zone in order to sell sterling towards 1.2420. Around 1.2420 we may see some pullback before a potential break below 1.24 could send the pound towards 1.2250. A current resistance is however seen at 1.26.
Head-Shoulders pattern could still be in play. Based on that pattern we expect a current resistance to be at around 1.0750. Thus, it could be rewarding to buy euros following a sustained break above 1.0750 while on the downside, the 1.0580-level remains in focus. It should be noted, that this pattern becomes void as soon as the euro breaks above 1.0770. Below 1.0580 we expect bearish momentum to accelerate.
Euro traders will watch the Eurozone Consumer Price report scheduled for release at 10:00 UTC, which could have an impact on the euro, provided that it exceeds expectations. Before that report, the German Unemployment report due at 8:55 UTC and ECB president Mario Draghi‘s speech at 8:00 may have a minor impact on the EUR/USD.
From the U.S. we only have Consumer Confidence scheduled for release at 15:00 UTC. Moreover, any action or word from Mr. Trump will dominate the markets.
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