EUR/USD had a strong end to the week last week but that was more down to the weaker dollar, caused by President Trump reaching a deal to reopen the Federal Government. Uncertainty continues to as the discussed agreement is only valid until the 15th of February, when we another shutdown could happen.
The ECB left monetary policy unchanged at its meeting however it did acknowledge the fact that downside risks are growing. Some analysts are beginning to predict the Eurozone will fall back into recession, so from a fundamental stand point, the risks for EUR/USD are lower.
Signs are positive for EUR/USD on the weekly chart, a hammer candlestick has formed on the weekly and there is also buy signals on both oscillators.
The daily chart has been ranging between the 1.12 and 1.15 levels for a couple of months. It struggles to significantly break through the 1.13 support level, which is holding very well.
A short term trend line was broken and then immediately proven to be a fake break, suggesting yet more uncertainty and ultimately a choppy sideways market.
Both secondary indicators, the MACD and the slow stochastic have given sell signals but the momentum shown by the histogram on the MACD is slowing and the slow stochastic is closing in on the over sold zone. Neither indicator giving a clear indication of direction.
With higher timer frames always trumping lower time frames, a short-medium term move high is expected. As the daily chart is showing an indecisive market, this move higher would likely be choppy and not trend nicely.
Expect the 1.15 level to be tested again, with the next level of resistance being the recent high at 1.1569. Give the poor outlook for the Eurozone and the recent choppy market, I would be looking to sell any breaks of that high, with the expectation that this market will continue to go sideways until a direction is proven. The trade would therefore be a range trade.
Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.