EURUSD Retests Neckline Resistance

With only third-tier data released from Europe, EURUSD traded sideways yesterday. The currency pair was stuck within a 22-pip range as it hovered around 1.1070 before closing with a 7-pip gain. The euro-dollar exchange rate opened today at 1.1077.

The European Central Bank (ECB) released the September report for euro zone’s current account. Data revealed that the value of the region’s exports were 28.2 billion EUR higher than the value of its imports. This number is higher than market estimates which was for a 22.3 billion surplus.

For today, a couple of third-tier data are also scheduled for release. The German PPI report is slated at 7:00 am GMT with analysts estimating it to print flat at 0.0%. Better-than-expected PPI could be bullish for the euro as it would mean higher inflation. Then at 9:00 am, the ECB will release their Financial Stability Review. The euro could also find some support from the central bank’s report if it reflects resilience in the region’s financial system amid the ongoing trade war.

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EURUSD Outlook

EURUSD stalled at resistance around 1.1077. If you remember, this area also coincides with the neck line of the double top we pointed out earlier this month on the daily time frame. If resistance holds at this level, EURUSD could trade lower to test support at 1.0991 where it hit a low on November 14.

Alternatively, the currency pair move higher if there are enough buyers in today’s trading. The 4-hour chart reveals a bullish pennant chart pattern. In forex trading, this is seen as an indicator to buy as the consolidation following its strong move upwards suggests that buyers are priming for another rally higher. A bullish candle closing above yesterday’s high at 1.1089 could send EURUSD to its November 1 highs.Download our latest quarterly market outlook for our longer-term trade ideas.

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