US housing starts/building permits much better than expectations
The EURUSD has moved below the 100 day MA after the better than expected US housing data.
The pair fell in European trading session after ECB comments and weaker ZEW data pressured the pair (see the morning wrap). The key 100 day moving average (blue line in the chart above) comes in at 1.1175. A new low is being printed with the next target coming in at last weeks low of 1.1130.
If the price closes below the 100 day MA it will represent the 2nd failed break above the key moving average in trading this month. The fall back below, puts the bears even more in control (see post from yesterday: Forex technical analysis: EURUSD down on the day. Is the high in?).
The pair bottomed at the 1.0461 in March and corrected to high of 1.14658 on Friday. The total move was around 1005 pips - close enough to a nice round number and certainly more than most had expected. A move below the 1.1130 level will next look toward the 38.2% of the move up from the Match low. That level comes in at the 1.1082.
The 100 day MA will now be the risk defining level for the shorts. Stay below, and the shorts remain in control. Move above and the technical waters get more muddy.
The shifting bearish sentiment technically in the EURUSD - which started yesterday - comes not far after US corporate earnings showed weakness in Q1 from a rising dollar. The memories of the 1st quarter, may prompt corporations to play things more safe with their currency exposure going forward. Being above the 100 day MA provides some breathing room. Moving back below it, may not sit so well with corporate treasurers and /or those managing currency risk positions. With a much better piece of data out of the US today and the ECB official adding their push, the greenback is looking better fundamentally. The 100 day MA becomes an important technical line in the sand for traders to lean against.
