The EUR/USD daily outlook: a crucial bearish trend line still in place

On Friday, January 18, the common European currency is trading slightly higher, trying to regain the losses of the previous day. Yesterday, the EUR/USD formed a sluggish downward move, however, in the second half of the day, the euro bulls managed to win back part of the morning losses.

As for the macroeconomic statistics in the Eurozone, the final CPI was published, which in December showed a zero change, as analysts expected. In annual terms, the figure increased by 1.6%. Thus, the inflation rate slowed down and reached its lowest level since April.

The lowest inflation in annual terms was observed in Greece, Portugal and Denmark. The highest increase in consumer prices was recorded in Estonia, Romania and Hungary. In Germany, the growth rate was 1.7%, again causing traders’ concerns about the state of the leading Eurozone economy.

According to the US Department of Labor, the number of initial claims for unemployment benefits fell by 3,000 over the week. Despite the rise in unemployment in December, it remains at low levels by historical standards. The US labor market remains strong, boosting traders’ confidence in the Federal Reserve’s implementation of the two scheduled increases rounds in 2019.

Yesterday, the Federal Reserve Bank of Philadelphia published data on manufacturing activity. In January, the index increased by 7 points, adding optimism about the improving economic situation in the United States as a whole.

EUR/USD Technical Analysis

The Euro declined heavily this week and traded below the 1.1450 support area against the US Dollar. The EUR/USD pair even broke the 1.1400 support area before buyers appeared near the 1.1370 level.

The pair traded as low as 1.1369 and later started consolidating losses. It recovered above the 1.1380 level, but there is a strong resistance formed near 1.1400, the 50 hourly simple moving average, and the 23.6% Fib retracement level of the last decline from the 1.1489 high to 1.1369 low.

Moreover, there is a crucial bearish trend line in place with resistance near 1.1400 on the hourly chart. Therefore, a break above the trend line and 1.1400 may open the doors for a recovery.

The next resistance is at 1.1430 and the 50% Fib retracement level of the last decline. On the downside, the main support is at 1.1370, below which it could test 1.1350.