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EUR/USD  is trading on high ground, unable to move above 1.37 but is also refusing to retreat. The weaker than expected US figures on Thursday gave the pair another push higher after the strong PMIs in Europe. The close of the week features a speech from ECB president Mario Draghi, which might address the growing deflation concerns, as recently voiced by the IMF.

Here is a quick update on the technical situation, indicators, and market sentiment that moves euro/dollar.

EUR/USD Technical

  • EUR/USD  calmed down in the Asian session after having a strong run in the previous two session. 1.37 served as a cap.

Current range: 1.3675 to 1.3710.

Further levels in both directions:

EURUSD January 24 technical analysis one hour chart for currency trading forex

  • Below: 1.3675, 1.3615, 1.3550, 1.3450, 1.34, 1.3320, 1.3240 and  1.3175.
  • Above: 1.3710, 1.3800, 1.3832, 1.3940 and 1.4036.
  • 1.3675 is only weak support, 1.3615 is stronger.
  • 1.3710 is strong resistance and a key battle line. A break here could send the pair much higher.

EUR/USD Fundamentals

  • 9:00 Italian Retail Sales: exp. +0.4%, actual 0%.
  • 14:00  Belgian NBB Business Climate. Exp. -4.4 points.
  • 17:00 ECB president Mario Draghi talks.

*All times are GMT

For more events and lines, see the  Euro to dollar forecast.

EUR/USD Sentiment

  • Mixed US data weighs on the dollar: While jobless claims dropped a bit, the miss in existing home sales, was enough to spark another sell off of the USD against the euro, as well as against the pound and the yen. It seems that markets have already priced in another taper in January, and are looking for opportunities to take profit on dollar gains.
  • Worries about China: Jitters in Chinese money markets, as well as comments about a “severe economic situation” in the world’s No. 2 economy are worrying markets. While the impact is currently limited to commodity currencies, lower Chinese demand for German products could change the European picture one day.
  • Euro jumps on solid PMIs:  Eurozone PMIs looked solid on Thursday, giving a big boost to the euro. French Service and Manufacturing PMIs beat the estimates, although both remain in contraction stage. German Manufacturing PMI posted a gain in December, but the Services PMI dipped lower, missing the estimate. Eurozone Services and Manufacturing PMIs both beat the estimates. These readings are welcome news, as recent Eurozone releases have not looked impressive.
  • IMF warns about deflation in Europe: The IMF joined the talk about the danger of deflation in the old continent. This was seen in a report published by the organization as well as in a speech by MD Christine Lagarde in Davos. Eurozone indicators continue to point to weak inflation, and this was underscored on Monday, as German PPI posted another weak reading, posting a gain of just 0.1%. While  the ECB seems concerned  with low inflation  and not outright deflation, any further deterioration could push the ECB to set a negative deposit rate as soon as March 2014. This is a primary source of euro vulnerability.

More technical analysis:    EUR/USD Rebounds from Key Support after Pullback