EUR/USD gravitating back towards $1.35
Light volumes allowed EUR/USD to levitate against the US dollar but while the $1.35 level is providing major support, the bias here still remains to the downside.
Eurozone data continues to get worse, with recent figures from Italy showing inflation has all but disappeared. Again, Mario Draghi might not see deflation, but we’re not seeing inflation either. The general view remains that the European Central Bank will need to do more to get the economy going, or at least to continue combating low inflation.
On a weekly chart the 20-week moving average has crossed below its 50-week cousin, a very bearish signal, having not been in this position since November 2012.
Meanwhile, the $1.35 level on the daily chart stands out as the main element holding the market up. A close below here puts $1.34 into view and then $1.33, both of which saw buyers towards the end of last year. Any upside continues to be capped by the 50-daily moving average around $1.3615.