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EUR/USD forex signal - Short term retracement - 12 Feb 2018

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The EURUSD posted strong declines last week as the previously held rally started to lose steam. The euro currency had been consolidating near the top end of the rally for a while prior to the decline.

The declines in the currency come amid a mix of factors. These included the ongoing political developments in Germany. Despite winning the elections last week, Angela Merkel's party has yet to form a government. Eventually, the CDU/CSU party managed to strike a deal with the SPD but the alliance came a cost of giving away some important positions in the government.

The U.S. dollar was also seen stronger last week as the equity markets tumbled. This sparked a flight to safety as investors bid up the U.S. dollar in favor of other currencies. The fact that investors are now expecting inflation to tighten has also saw the markets re pricing for at least three rate hikes from the Federal Reserve this year.

The U.S. labor market has been tightening with the unemployment rate sitting at historical lows. Investors fear that inflationary pressures could start to rise rapidly which could trigger a policy response from the central bankers.

The weekly forex signal is EURUSD, the currency pair fell to a three week low on an intra week basis. Price managed to rebound slightly off the lows. Given the sharp declines in the currency pair, we expect to see some near term retracement taking place. This could potentially give EURUSD the chance to retest the breached support level for resistance.

If we expect a reversal at the resistance level of 1.2353, then EURUSD could potentially be set to post further declines. Therefore, we are looking to take short positions at the resistance level, with a stop loss at 1.2435 and targeting the lower support level at 1.2090 is ideal. We expect that the currency pair will start to resume the declines sooner.

forex signal eurusd 12 feb 2018

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.