EUR/USD Forex Signal 06.01: Doji, Ascending Triangle Points

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1800.
• Add a stop-loss at 1.1650.
• Timeline: 1-2 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1650.
• Add a stop-loss at 1.1800.

The EUR/USD pair retreated and then pared back some of these losses as the market came to terms with the weekend events on Venezuela. It retreated to a low of 1.1657 and then settled at 1.1723 on Tuesday morning as investors focused on the upcoming US data.

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The EUR/USD exchange rate was flat on Tuesday as investors reacted to the arrest of Nicolas Maduro, Venezuela's president. In his court hearing on Monday, he pleaded not guilty as was widely expected.

Market participants believe that these events will have a limited impact on the energy market in the near term. In the long term, however, they could lead to higher production from Venezuela and lower prices.

The pair also reacted to a report by the ISM that showed that the manufacturing sector continued to contract in December. It moved from 48.2 in November to 47.9 in December. A PMI figure of below 50 is usually a sign of contraction. Indeed, official jobs numbers show that manufacturing jobs have been falling since July last year.

There will be some minor macro data from the EU and the US this year. Economists expect a report from France to show that the headline inflation remained at 0.9% in December, lower than the ECB target of 2.0%. The German inflation report is expected to come in at 2%, lower than the previous 2.3%.

S&P Global will then publish the latest services PMI figures from Europe and the United States. While all these numbers are important, the most crucial ones will be on the US labor market, which will start coming out tomorrow. ADP will publish its estimate of private sector payrolls, while the Bureau of Labor Statistics (BLS) will release its report on Friday.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The daily chart shows that the EUR/USD pair has been under pressure in the past few days. It has retreated from a high of 1.1805 on December 24 to the current 1.1722.

The pair has formed a doji candlestick pattern, which is made up of a long lower shadow and a slim body. A doji is a common bullish reversal sign. It has remained above the 50-day and 100-day Exponential Moving Averages.

The EUR/USD pair has formed an ascending triangle pattern, a common bullish continuation sign. Therefore, the most likely forecast is where it continues rising as bulls target the initial resistance at 1.1805. A move above that level will point to more gains to last year's high of 1.1915.

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