EURUSD To Retest Neckline of Double Top?

The euro is off to a bullish start in today’s Asian session. EURUSD opened at 1.1047 for this week and has steadily traded higher above last week highs, reaching 1.1062. If there’s enough upward pressure in today’s trading, the euro could be poised to extend its winning streak against the dollar.

Disappointing US Data

Risk appetite helped the shared currency trade higher in Friday’s trading. After risk aversion dominated trading early on in the week, the lack of significant developments surrounding the US-China trade deal helped investors seek higher-yielding assets.

Disappointing data from the US also dampened demand for the US dollar and boosted the euro. Industrial production declined by 0.8% which was wider than the -0.4% forecast. The Empire State Manufacturing Index also fell short of market consensus. It showed that manufacturing activity in New York is slowing with the report printing at 2.9 versus the 6.1 forecast.

Meanwhile, consumer spending reports were mixed. The headline number came in higher at 0.3% versus the 0.1% estimate. The core reading, which excludes the prices of volatile items like petrol and utilities, disappointed expectations at 0.2% versus 0.3%.

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EURUSD Outlook

The euro’s bullish run could be short-lived.

Looking at the daily time frame, the next resistance level for the  currency pair is around 1.1080. This level is the neckline of the double top chart pattern that we pointed out a couple of weeks ago. Using the Fibonacci retracement tool and drawing from the high of November 4 to the low of November 14, we can see that this area also coincides with the 50% Fib level. The 100 SMA also falls around this area. Bearish candlesticks could signal that EURUSD would soon resume its downtrend where the next support level would be the currency pair’s yearly lows at 1.0877.

On the other hand, a strong bullish close above 1.0880 could mean that the currency pair may soon trade around the highs of October and November at 1.1070.Download our latest quarterly market outlook for our longer-term trade ideas.

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