Two trades to watch: EUR/USD, DAX

EUR/USD falls after weak German retail sales, EZ CPI up next. Dax below 14000 on global asset bubble fears


EUR/USD falls after weak German retail sales ahead of EZ CPI

EUR/USD trades under pressure after dismal German retail sales and ahead of Eurozone inflation data.

German retail sales YoY -8.7% vs 2.8% & 1.5% exp.  MoM -4.5% vs -9.1% & -1% exp.

EZ CPI February is expected YoY 1% vs 0.9% Jan 

USD  gains strength on strong US manufacturing data on Monday and a weaker equities market.

There is no US data due today.

Where next for EUR/USD?

EUR/USD is extending losses for a second straight session. It is now trading at its 100 sma support on the daily chart at 1.2020. This acted as a strong support in February. 

The RSI is supportive of further losses below 50 but some way from oversold territory.

A break 1.2020 100 sma support could see the key psychological level 1.20 tested ahead of 1.1950 the yearly low. A move below this level could see the bears gain momentum The corrective decline could then test 1.19 round number on its way southwards towards 1.18.

On the flip side a meaningful recovery above the 100 sma could be considered a selling opportunity, with gain potentially capped around 1.21. A sustained move above this level could see the 50 sma tested at 1.2150 before a move towards 1.2185.

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Dax Eases Below 14000

European indices are pointing lower after senior Chinese officials expressed wariness about the risk of asset bubbles in foreign markets.

Weak German retail sales will add to the downbeat sentiment.

German unemployment data is due at 08:55 UTC and is expected to remain a 6% in January

Where next for the Dax?

The Dax continues to trade within a holding pattern capped on the upside by the all time high above 14170 and capped on the bottom side by 13565. It trades above its 50 & 100 sma on the daily chart although the rise higher has shown signs of exhaustion since the start of the year.

The price trades towards the upper end of the horizontal channel however but failed again yesterday to move convincingly above 14000. A sustained move over this level is required to test the all time high and target 14500.

On the downside the 50 sma offers support at 13840 ahead of the lower band of the channel at 13565. A move below the 100 sma at 13400 could see more bears jump in.

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