EUR/USD Bulls Broke December Highs, But Correction Is Still Possible

The US Dollar was under intense selling pressure on Thursday and was being put down by renewed fears of an inversion in the yield curve, seen as a reliable indicator of a recession in the future. The FOMC policy decision/outlook turned out to be not so dovish and led to a rise in short-term and a fall in the long-dated yields, which affected the USD negatively. The greenback was further pressured by disappointing Philly Fed Manufacturing index, which plunged by 3.5 to 9.4 for a month.

Broad-based USD selling pushed the EUR/USD pair to six-week tops and closer to the key 1.1500 psychological marks.

The pair was oscillating in a narrow trading band through the Asian session on Friday as market participants now look forward to the release of German GFK consumer confidence index. Today’s release of important US macro releases is expected: Q3 GDP and November durable goods orders data might infuse some short-term volatility.

(Click on image to enlarge)

EURUSD-Chart

The Euro started a decent upward move this week and traded above the 1.1380 resistance area against the US Dollar. The EUR/USD pair even broke the 1.1420 resistance area to move into a bullish zone.

The pair traded as high as 1.1484 recently and settled above the 50 hourly simple moving average. At the outset, the pair is correcting lower towards the 1.1435 support or the 50% Fib retracement level of the last wave from the 1.1402 low to 1.1484 high.

On the downside, there is a major bullish trend line in place with support at 1.1430 on the hourly chart of EUR/USD. Therefore, if there is a downside extension, the pair is likely to find bids near 1.1430.

On the upside, a break above the 1.1480 and 1.1500 resistance levels may perhaps clear the path for more gains in the near term.

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