Two trades to watch: EUR/USD, WTI

EUR/USD holds 1.21 ahead of US CPI & Fed Powell. WTI rally stalls ahead of EIA data.

Charts (3)

EUR/USD holds 1.21 ahead of US CPI & Powell

EUR/USD trades above 1.21 at its highest level since Feb 1st on broad USD weakness.

Expectations of additional US stimulus overshadow the Eurozone’s slow vaccine rollout. 

German CPI final Jan MoM 0.8% vs 0.5% Dec & 0.8% exp. YoY 1% in line.

US CPI & Fed Chair Powell awaited

EUR/USD technical analysis

A meaningful move above horizontal support turned resistance at 1.2055 was a key signal for the EURUSD bulls. The sustained move above 1.21 round number, 50 sma on the 4 hour chart and descending trendline dating back to 11th January suggests further gains.

That said, the RSI has moved into overbought territory which warrants caution. 

Horizontal resistance can be seen at 1.2150 (high 29th Jan) a break above here could see the bullish move gain momentum towards 1.2185.1.22 before 1.23 round number.

On the downside, 1.21 offers immediate support prior to the key 1.2055. Beyond this level the near term positive bias is negated and 1.20 the psychological level becomes he target.

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WTI rally stalls, EIA data in focus 

Whilst fundamentals support further upside, after 7 straight days of gains the rally in WTI is starting to look tired.

The bullish narrative of more US stimulus, rapid vaccine rollout helping a strong global recovery in demand & OPEC+ keeping market conditions tight.

API posted a surprise 3.5 million barrel draw versus an expected 1 million barrel build. EIA data awaited later today.

WTI technical analysis

WTI has had a solid run up gaining over 11% this month in its recent bullish run.

WTI shoot up from $57.27 on Tuesday to $58.50 which is proving to be a tough nut to crack. With the RSI still teetering on overbought territory and multiple long wicks the latest push higher in WTI is showing signs of fatigue and a price pull back, at least in the short term could be on the cards.

The ascending 20 sma at $57.67 offers immediate support and is the level to watch. The 20 SMA support has been unbroken across February. A breach here could negate the current near term uptrend and bring 55.65 the 100 sma into target.

On the upside, $58.50 is offering strong resistance ahead of 59.00 round number and $60 the key psychological level is the target for the bulls.

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