Alexanderplaz Train, Germany. Image source: Dillon Thomas, flickr.com
The EURUSD recently completed a failed breakout above a major consolidation range. The price action retreated because of the currently strengthening dollar. To read more about it, check out our probing analysis of the EURUSD pair.
German industrial activity jumped in January, easily beating the preliminary forecasts. Both the manufacturing and services sectors recorded substantial improvements from a month prior. Nevertheless, the euro continues to be at a disadvantage against the greenback in the short term.
EURUSD 2H Price Chart. Image source: Trendsharks ©, created with TradingView.com
The price action returned within the boundaries of the major consolidation range spanning between the major support level at 1.12850 and the major resistance at 1.13850, as shown on the 2H chart above. The retracement from the false breakout takes the form of a descending channel.
At present, the price action is consolidating just above the middle line of the channel, which could be followed by a possible pullback to its upper limit. However, the underlying bullish momentum is falling, as demonstrated by the MACD indicator. This means that the next target for the dropdown would most likely be the lower border of the consolidation range.
German industrial activity improves amidst a general economic recovery
Germany MoM Manufacturing PMI. Image source: TradingEconomics.com
Factory activity in January was recorded at 60.5 index points, beating the market expectations of 47.9 points. This marks a sizable jump from the 48.7 index points that were recorded in December, the first notable improvement in five months. This overwhelmingly positive development was observed despite the record-breaking inflation in the Eurozone, which keeps producer prices elevated.
The Markit institute also posted better-than-expected numbers for the services sector, which expanded by 52.2 index points vs 47.9 points expected. This performance is inlined with the recuperating economic sentiment in the Eurozone and a moderate increase in German consumption that were recorded over the same period.
Germany MoM Services PMI. Image source: TradingEconomics.com
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