EUR/USD: Swept Higher by Brexit Hopes, But Bears Never Went Away

FXStreet  |
  • EUR/USD is extending its recovery amid Brexit hopes.
  • US inflation came in softer than expected.
  • The technical picture remains slightly bearish for the pair.

EUR/USD is trading closer to 1.1300, already over than 100 pips from the 21-month low, it reached after the ECB turned dovish on Thursday. A better market mood explains the gradual climb.

A late-night meeting in Strasbourg, France, resulted in an amended Brexit accord. While the House of Common soundly rejected the deal, it will open a process to delaying Brexit. Clinching the accord sent the pound higher, and the upbeat market mood also pushed the common currency up as well.

More on what can happen with Brexit: GBP/USD Forecast: 4 scenarios for the critical Brexit Day and levels to watch

Rising stock markets also pushed the pair higher as the safe-haven greenback lost ground. Stocks are recovering after suffering last week. The US Dollar is also on the back foot after mixed retail sales data on Monday. While the figures for January missed expectations, the disastrous data for December became even worse instead of an expected revision upwards.

US CPI came in much softer than expected, which may give the Fed some breathing room. Fed Chair Jerome Powell spoke once again but did not mention monetary policy. Fed Governor Lael Brainard spoke about potential reforms to the Community Reinvestment Act that could permit banks to expand their lending coverage to rural areas outside of their typical assessment zones.

EUR/USD Technical Analysis

EUR USD technical four hour chart March 12 2019

EUR/USD still suffers from slight downward momentum on the four-hour chart but is getting closer to the 50 Simple Moving Average. The Relative Strength Index is roughly balanced around 50. All in all, bears still have an advantage.

Immediate resistance is at 1.1285 that was a swing low last week, just before the crash. 1.1310 was another swing low the previous week, and 1.1325 capped euro/dollar before the fall. 1.1350 is where the 200-SMA meets the price.

Support awaits at 1.1245 that was a temporary bump on the way up, followed by the February low of 1.1235 and 1.1220 that was a support line before the recent recovery. The 2019 low was 1.1176.

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