The technical picture is shaping up well
As we explained in a post at the end of December, there was a strong resistance level near 1.21 on the EUR/USD chart. This temporarily halted the euro’s rise against the dollar. After the euro approached this level it turned down. The long-term trend, however, is still intact as the pair stays in its trading range. In case the correction continues during the next couple of days the rate could reach the lower bound of its trading range somewhere below 1.19 (see the chart). This would give a very strong buy forex signal for the euro, given the strong fundamentals of the European economy.
Important news from the US and Europe
The latest evidence of strong European recovery is the increasing German trade surplus and surging exports. On the top of that, other important data will come out from Europe this week. On Thursday the ECB Monetary Meeting Accounts may contain some hints on how much do we have to wait until the ECB starts tightening. This communication also tells a lot about how economists at the European Central Bank see the future of the European economy. On the next day US retail sales and inflation data will tell more about the future price trends in the world’s biggest economy.
The technical forex signal when the price of the euro reaches the lower bound of its trading range, together with fundamental data pointing to the same direction could provide a very good buying opportunity. The most important thing is to wait patiently until the necessary technical setting is there. In case the fundamentals does not surprise the market, the correction should be over and euro should start to rise again as the long-term trend continues.