EURUSD has established a bullish higher low at 1.112. A break above recent highs near 1.124 seems likely due to weak US data. The US ISM non-manufacturing for December should print at 54.5. Here is the EURUSD Fundamental Analysis of 07 January, 2020.
07 January, 2020 | AtoZ Markets – EURUSD looks north after reaching a bearish low in the past two trading days. And the pair could reach a five-month high above 1.123 if US data shows a deceleration or a contraction of non-manufacturing activity.
EURUSD Fundamental Analysis – 07 January, 2020
EURUSD jumped 0.34% on Monday as the currency drew bids following an upward revision to the German services PMI. Monday’s gain validated sellout exhaustion signaled by the long tail attached to Friday’s candle and confirmed a bullish low at 1.1112.
In other words, the decline from the recent high of 1.123 likely ended, and the November 29th rally from 1.0981 has resumed. The pair could go back to 1.123. And it will probably break higher if the US non-manufacturing ISM data for December, expected at 3:00 p.m. GMT. It appears below the November level of 53.9, signaling a deceleration of the activity. Reading below 50 would imply a contraction. The market expects an impression of 54.5.
A big beating on expectations would validate the Federal Reserve’s decision to halt rate cuts, sending the US dollar higher across the board. In Europe, the pair could draw inspiration from euro area retail sales data for November. That is due to be released at 10:00 GMT. At the time of writing, the EURUSD is trading virtually unchanged on the day at 1.119.
Traders Remain Cautious Amid Mideast Tensions
The US dollar was almost flat in Asia on Tuesday as traders remained cautious about the situation in the Middle East. The US dollar index following the greenback against a basket of other currencies. It is traded at 96.36 at 12:42 AM ET (04:42 GMT), up 0.01%.
US has no plans to depart troops from Iraq. Defense Secretary Mark Esper said that on Monday following the publication of a letter from the US military. It is informing Iraqi officials of the repositioning of the troops because of their departure.
Last week, President Donald Donald ordered a drone attack in Baghdad and killed Iranian military commander Qassem Soleimani. That has increased tensions between the two countries. Iranian leaders have promised to avenge the murder.
On Monday, data showed that the US manufacturing sector contracted in December, with order volumes crashing to their lowest level in nearly 11 years. And factory employment is falling for the fifth consecutive month.
Think we missed something? Let us know in the comments section below.