Forex Trading: EUR/USD Cracks Overnight On CPI Flash

The Eurozone Flash CPI came in at 1.6%, lower than the 1.8% expectation and down from 2.1% last month.  The 1.6 rate assumes a M/M change of 0.0%.  The risk for inflation in the Eurozone is declining and could easily move toward 0.0% in a few months as domestic economic growth stagnates and exports slow due to the higher EURO (versus GBP and USD).

From a technical perspective, the 100 day moving average at the 1.3616 level was broken for the second day in a row.  Yesterday, the moving average was broken intraday, but the market was able to move back above the key level before the close.  Today, it seems all but certain that the price will close below this key level.   The price on the daily chart also moved through the 50% retracement level of the move up from the Oct 28th low of 1.2329 to the Dec 18th high of 1.4719.  That level came in at 1.3524. The next level of support for the pair comes in at the 61.8% retracement of the same move at the 1.3242 level.  The low for the day has been 1.3311.

On a intraday basis, the pair has basically trended down for the entire day with lower lows and lower highs.  There ahould be resistance at the 1.3400 level which corresponds with an intraday low and corrective high.  A move above this level might suggest the low is in place.  A move below the low at 1.3311 should probe the downside further.

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