The EURUSD correction likely isn’t over yet, waiting for the dollar index to breach mid-December 2018 high.
Recent data print suggest that economic weakness in EZ pose further downside risk for the single currency for the coming weeks as the inflation has continued to pose the downside risk.
We focus on the 1.1140 its 100.0fe corrective A-B-C structure, note that 61.8% fib reaction of Jan 2017 low-Feb 2018 high located at 1.1160.
In January 2019, Germany industrial production down by 0.8% from the previous month.
The ECB lowered its 2019 GDP forecast and revised upward for EZ’s unemployment rate. On top of these, the central bank injected new stimulus launch of a new TLRO in September 2019 and ending in March 2021.
Compared with the December 2018 Eurosystem staff macroeconomic projections, the outlook for real GDP growth has been revised down substantially in 2019 and slightly in 2020.”
Compared with the December 2018 Eurosystem staff macroeconomic projections, “The outlook for HICP inflation has been revised down across the projection horizon, HICP inflation at 1.2% in 2019, 1.5% in 2020 and 1.6% in 2021.”
We will see EZ February CPI data on Friday. We expect the Euro area annual inflation is expected to uptick by 0.1% to 1.5% from 1.4% in January.
Besides in the U.S, we will get Retail sales, IP and CPI.
As the daily RSI has picked up, we favor new rebounds to resistances at 1.1300 its 20MA ahead of 1.1360. There will need to be a breakout above 1.1300 to envisage an extension of the price ascent towards 1.1340-1.1360 its 200MA (Weekly) and 20MA (Weekly).
Support levels located at 1.1220 and 1.1160. We focus on the 1.1140 its 100.0fe corrective A-B-C structure, note that 61.8% fib reaction of Jan 2017 low-Feb 2018 high situated at 1.1160.
Though the daily RSI picked up, oscillator RVI, remain bearish. Based on this we expect rallies could cap in the coming days.
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