EUR/USD bounces after big 1.1500 rejection; disappointing US Data

Chris L
Category:  Financial News
The Euro is fighting back against the US dollar with a positive day following a significant rejection of the EUR/USD around 1.1500. The pair remains inside the channel.

The move could have different fathers as it could be Dollar index failing bounce but also data disappointing in the United States.

Previously in the week, the Dollar index fell to its lowest level since October 22 at 95.65, where the unit found support and it built a strong bounce that sent the DXY to test the 97.00 area.

However, the DXY was not able to maintain gains and it got back below the 20 and 50 days moving average levels. Kept below those levels, the DXY is now trading 0.32% negative at 96.35.

Technical indicators for the Dollar index remains weak, but some recovery signals can be seen at least in the short term. However, all the odds are for more declines.

Watch out for the 96.20 as the next buying area. If broken, the unit will visit the 95.65 level again.

Earlier in the day, the ISM manufacturing data for December came at 54.1, well below expectations of 57.9 and a deeper contraction from the 59.3 number reported in November.

The concerns were extended when ISM prices paid were reported at 54.9 in December, also below expectations of 58.0 and a deeper drop from the November number of 60.7.

Initial Jobless claims rose to 231K in the week of December 28, from the higher revised data of the previous week at 221K. It was worse than the 220K new claims expected by the market.

On the bright side, ADP employment reported a strong number of 271K new private jobs in December, well above 178K jobs expected. However, previous month was revised 18K down to 157K new private jobs created in November.

EUR/USD heading north following data and weak USD

The EUR/USD is trading positive on Thursday following its strong rejection from the 1.1500 level on Wednesday. The pair is trading 0.55% positive at 1.1405 so far on the day.

The pair is taking advantage of US weak data and mixed numbers from the ADP private employment report.

As for the short term, the pair seems ready to make another attempt to the 1.1500; however, it will be hard to be broken given Wednesday's reaction.

Technical indicators suggest more gains in the short term with a revisitation of the 1.1500 level on the cards. However, the bigger picture does not look that bright as the pair remains neutral in the 1-day chart.

The EUR/USD remains inside the same channel it has governed the unit since October 2018, and it looks hard to be broken at least for now. However, we never know!
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