EUR/USD back to 1.2410 handle as Tokyo trading remains thin, volumes low
- EUR/USD listless on thin markets.
- China, US out of the picture for Monday.
EUR/USD is suffering from a lack of direction, trading near the 1.2410 handle after peaking at 1.2435 amidst thin volumes, with China taking the first half of this week off to celebrate Chinese New Year. The US markets will also be on the sidelines for Monday, as the country celebrates President's Day.
The pair managed to squeeze out a new three-year high on Friday, before falling back below Thursday's opening price, creating a bearish outside candle. The UK Telegraph reported comments from European (EU) Parliament’s Chief Brexit coordinator Guy Verhofstadt, who stated that the UK will be heading into Brexit day without a finalized trade agreement in place with the EU; Brexit can be expected to continue playing tug-of-war between the GBP and the Euro as we inch our way closer to the official Brexit day, and as the pressure mounts, it may prove too much for risk bulls to handle if the Brexit process doesn't begin to shape up into a more organized event.
The week looks fairly quiet for EUR/USD on the news side, outside of the European Central Bank's (ECB) Non-Monetary Policy Meeting Minutes on Wednesday at 08:00 GMT, where conversation can be expected to revolve around the ongoing Brexit negotiation process, and CPI data for Europe headlining on Friday at 10:00; market analysts are forecasting year-on-year numbers to hold steady, matching the previous reading of 1.3% for the period ending January.
EUR/USD Technicals
As FXSteet's own Haresh Menghani notes, "the pair's repeated failures to build on/sustain its strength beyond the key 1.2500 psychological mark now seems to point towards a possible bearish double-top chart pattern formation on daily charts. Having said that, the near-term top formation would be confirmed only once the pair decisively breaks below an important horizontal support near the 1.2215-10 region.
In the meantime, sustained weakness below the 1.2400 handle is likely to find support near 1.2370 level ahead of 1.2335 zone and the 1.2300 handle. On the flip side, any meaningful upside beyond mid-1.2400s might continue to confront some fresh supply near the 1.2500 handle and only a decisive close above the mentioned barrier would negate the bearish formation."