Could Euro Resume Upside Rally This Week?

The EUR/USD pair closed the week unchanged around 1.1350, as the greenback advanced on Friday. The dollar surged amid a general positive tone in local data, as the number of job openings decreased to 5.4 million in August, a little weaker than expectations, but still at high levels.

Consumer sentiment climbed more than forecast in October, with the University of Michigan’s preliminary consumer sentiment index up  to 92.1, the first advance in four months. In Europe however, inflation fell into negative territory yearly basis, resulting at was -0.1% in September 2015, down from 0.1% in August. Monthly basis, it come out at 0.2% against previous 0.0%.

The ECB will have an economic policy meeting this week, and market talks point for an extension in its Q3 program, given that inflation remains at record lows. Also, the EU will release its latest PMI figures, a neat barometer of the economic situation. Should the Central Bank refrain from changing its policy, the common currency may get a nice boost and return towards the 1.1500, as long as it previously holds above 1.1280.

For this Monday, the EUR/USD pair maintains a positive technical tone daily basis, although failure at 1.1500 earlier in the week suggests a limited upward potential ahead. Nevertheless, the price holds well above its moving averages, with the 20 DMA acting as a critical support around 1.1280 for the upcoming days, whilst the technical indicators hold well above their mid-lines, albeit lacking upward momentum at the time being.

In short term, the  4 hours chart presents a bearish tone, with the price having been unable to advance beyond its 20 SMA since last Wednesday, and the technical indicators maintaining strong bearish slopes in negative territory. Friday’s low at 1.1330 provides an immediate support, with a break below it required to confirm a bearish continuation for this Monday.

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