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EURUSD – Short-term Top or Reversal?

Key Points

  • Euro blasted higher against the US dollar this past week and traded above the 1.1200 area.
  • There was a triangle break noted on the daily chart, which ignited moves in the EURUSD pair.
  • Spanish Industrial Output released by the National Institute of Statistics posted an increase of 3.7%, which was less than the forecast for Dec 2015.
  • The Euro Area Sentix Investor Confidence also posted a disappointing reading of 6 for Feb 2016.

Technical Analysis

The Euro recently surged higher and traded above the 1.1200-20 resistance area. There was a triangle pattern formed on the daily chart, which was breached by buyers to call for an upside move in the EURUSD pair.

EURUSD chart

The best part is the fact that the EURUSD pair settled above the 100 and 200-day simple moving averages, which is a positive sign for the bulls.

There is a chance that the EURUSD pair may correct lower from the current levels. However, in that situation the Euro buyers may take a stand near the 200-day simple moving average as it represents a major support.

Spanish Industrial Output

Today, the Spanish Industrial Output that shows the volume of production of Spanish industries such as factories and manufacturing was released by the National Institute of Statistics. The market was expecting an increase of 4.3% in December 2015, compared with the same month a year ago.

However, the outcome missed the mark. The Spanish Industrial Output gained only by 3.7% in Dec 2015. Overall, the reports were positive during the London session for the Euro.

The EURUSD pair started declining, and it looks like on the daily chart the pair may continue down and trade near the 200-day MA.

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