Euro Tests Support – Further falls likely
The EUR/USD was on the defensive for most of Wednesdays trading session as interest rate differentials moved in the dollars favour. The currency pair tested support levels near and upward sloping trend line that come in near 1.2960. A daily close below this support level would likely lead to a test of the December lows near 1.2880. Resistance is seen near the 10-day moving average at 1.3028.
Momentum on the EUR/USD is slowing with the MACD (moving average convergence divergence) index losing its negative trajectory. If the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread a buy signal will be created.
The RSI (relative strength index) which is an oscillator that measures overbought and oversold levels is printing near 36, which is the low end of the neutral range but above the 30 oversold trigger level.
Looking forward, traders will be watching the EU consumer price index which is scheduled to be released on Friday at 10:00 GMT. The CPI index tracks changes in the price of a basket of goods and services within the EU. A higher than expected number will have a positive effect on the Euro.