EURUSD Price Rise Could Be False Break Higher
EURUSD price, news and analysis:
- As I suggested in an Analyst’s Pick a week ago, the EURUSD price has broken to the upside above a downward-sloping trendline in place since last April.
- However, the pair now seems to be consolidating just below the 1.15 level and fundamental analysis suggests it could now fall back again.
EURUSD price gains could be short-lived
As I suggested a week ago that it might, EURUSD has broken above a trendline joining the lower highs in place since April 17 last year and now seems to be consolidating just below the psychologically-important 1.15 level.
EURUSD Price Chart, Daily Timeframe (March 27, 2018 – January 9, 2019)
Chart by IG (You can click on it for a larger image)
However, fundamental analysis suggests the move could be a false break higher – a bull trap for optimistic traders.
Recent data show clear signs that the Eurozone economy is now faltering. Figures released Monday showed German factory orders down by a hefty 4.3% year/year in November and were followed Tuesday by news that German industrial production was down by an even larger 4.7% year/year that month.
Eurozone confidence data for December, released the same day, also missed forecasts and German trade numbers for November, published Wednesday, showed a steep 1.6% drop in German imports month/month.
This all suggests that the European Central Bank may have to keep Eurozone interest rates low for even longer than previously expected – and that could damage the Euro in the days and weeks ahead.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.