EUR/USD Forex Signal 08/01: Drops To Key Support (Chart)

(MENAFN- Daily Forex) Bullish view

• Buy the EUR/USD pair and set a take-profit at 1.1805.
• Add a stop-loss at 1.1550.
• Timeline: 1-2 days.

Bearish view

• Sell the EUR/USD pair and set a take-profit at 1.1550.
• Add a stop-loss at 1.1805.

The EUR/USD pair continued its strong downward trend this week after the Eurostat published the latest consumer inflation report. It was trading at 1.1682, down from the December high of 1805 Inflation Hits Target

The EUR/USD exchange rate retreated after a report by Eurostat showed that the bloc's inflation dropped to the European Central Bank (ECB) target in December. The headline Consumer Price Index (CPI) dropped to 2%, for the first time since summer.

Core inflation, which excludes the volatile food and energy services, remained at 2.2% during the month. With energy prices falling, there is a likelihood that the bloc's inflation will continue falling. It may drop below the ECB estimate of 1.9% soon.

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The bank's economists expect that the bloc's economy will grow by 1.2% this year, up from the previous estimate of 1%. Therefore, there is a likelihood that the bank will hike interest rates at least once this month.

The EUR/USD pair also retreated after ADP published the December private payrolls report. Data showed that private companies added over 45k jobs in December after shedding over 29k jobs in the previous month.

The next key data to watch will be the upcoming US jobs report, which will come out on Friday. Economists expect the report to show that the economy created 64k jobs in December, with most of them being in the services sector. The manufacturing sector has shed thousands of jobs in the last 12 months.

At the same time, thousands of government workers took Donald Trump's offers to quit. This is one of the main reasons why the unemployment rate has jumped to 4.6%.

EURUSD Chart by TradingViewEUR/USD Technical Analysis

The daily chart shows that the EUR/USD pair has retreated in the past few days, moving from a high of 1.1805 to the current 1.1680. It has moved below the diagonal trendline, which connects the lowest levels in November and December last year.

On the positive side, the Supertrend indicator is green, while the pair is above the 50-day Exponential Moving Average (EMA). Also, the Average Directional Index (ADX) has started moving downwards.

Therefore, the pair will likely rebound as bulls target the key resistance at 1.1805, the highest level on December 24. A move above that level will point to more upside to the key point at 1.1920.

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