Overview:
EUR/USD is range trading. The rate is underpinned by surge in German ZEW economic expectations index to nearly three-year-high of 31.5 in January (vs. 12.0 forecast) from 6.9 in December. But EUR/USD upside is limited by euro sales on retreating EUR/JPY cross as market participants continue to take profit on yen-shorts; prospect of currency war as German central bank president Weidmann warned erosion of central bank independence around the world could unleash competitive exchange rate devaluations. Daily chart is mixed as MACD is bullish, but stochastic is bearish at overbought; five-day moving average is meandering sideways.
Preference:
Sell below 1.337 with targets at 1.327 and 1.3245 in extension.
Support levels:
S1 - 1.3267 (Tuesday's low)
S2 - 1.3248 (Jan. 11 low)
S3 - 1.3200 (50% Fibonacci correction of 1.2998-1.3404 Jan. 4-Jan. 14 advance)
Alternative scenario:
Buy above 1.337. Above 1.337 look for further upside with 1.34 and 1.3435 as targets.
Resistance levels:
R1 - 1.3399-1.3404 band (Friday's high-Jan. 14 high)
R2 - 1.3435
R3 - 1.3486 (Feb. 29 high)
Technical comment:
As long as 1.337 is resistance, look for choppy price action with a bearish bias.
