EUR/USD: Unfazed by Weak Data, But Will the Trend Last? The Euro (EUR) is holding its ground against the US Dollar (USD), despite the release of weak Eurozone factory data. As of this writing, the pair is trading near 1.1865, remaining practically flat. But here's where it gets interesting...
The Eurozone's industrial production contracted by 1.4% in December, according to data released by Destatis. This was in line with market expectations, following a downwardly revised 0.3% growth in November. However, the subdued trading activity is keeping the pair broadly unchanged.
The pair has been trading within the last few days' range, and the common currency failed to draw any significant support on Friday after the release of softer-than-expected US Consumer Price Index (CPI) figures. This allowed the Federal Reserve to ease borrowing costs further, boosting a stalled labor market.
Trading activity remains subdued on Monday, with most Asian markets closed for the Lunar New Year holiday and US markets closed for President's Day. However, speeches from the Federal Reserve's Vice Chair of Supervision, Michelle Bowman, and the European Central Bank's Governor, Joachim Nagel, might provide some distraction in a calm market session, ahead of a busy data week.
Technical Analysis:
The 4-hour chart shows the EUR/USD hovering above the rising trendline from mid-January lows at 1.1855, which, together with the February 11 low at 1.1833, is providing support to the pair.
Indicators are neutral to negative. The Moving Average Convergence Divergence (MACD) sits fractionally below the zero line, and the Relative Strength Index (RSI) stands right below 50, reflecting balanced momentum.
Below the mentioned 1.1833, the next target is the early February lows at the 1.1775 area. On the upside, the 38.2% Fibonacci retracement of the late January reversal is holding bulls for now at 1.1890, and closing the path towards last week's highs at 1.1925.
Economic Indicator:
Industrial Production s.a. (MoM)
The Industrial Production index, released by Eurostat on a monthly basis, measures changes in the price-adjusted output of industry. It is a widely-followed indicator to gauge the strength in the Eurozone's manufacturing sector. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Controversy & Comment Hooks:
While the weak Eurozone factory data might suggest a bearish trend for the EUR, the pair's resilience and the Fed's actions could indicate otherwise. Will the trend last? What do you think? Agree or disagree in the comments!
