The American dollar rallied for most of this Tuesday, extending its gains against the common currency to its highest in 14-years. The EUR/USD pair sunk to 1.0340 following the release of much better-than-expected US data that fueled confidence in the world's largest economy. According to official releases, . US construction spending surged to its highest in 10 years increasing by 0.9% in November to $1.18 trillion, while the ISM Manufacturing PMI expanded in December at the fastest pace in two years, up to 54.7 from 53.2 a month earlier. The final Markit Manufacturing PMI for the same month, suffered a modest upward revision, printing 54.3 from an initial estimate of 54.2.
Earlier in the day, German's macroeconomic figures also surprised to the upside, although the EUR failed to benefit from the data, as the number of people out of work fell by a seasonally adjusted 17,000 in December, against an expected decline of 5,000, maintaining the unemployment rate at 6%. Also, preliminary inflation in the same month, came in better-than-expected, up by 0.7% when compared to November, and by 1.7% compared to December 2015.
Dollar's rally however, was quickly reverted in the US afternoon, with no certain catalyst behind the move, resulting in the EUR/USD pair ending the day around 1.0415, still in the red for the day. Technically, the 4 hours chart for the pair shows that technical indicators have bounced from near oversold territory, but remain well below their mid-lines, and below previous daily highs, whilst the price remains well below its moving averages, indicating that chances of additional gains are limited. Furthermore, and in the mentioned chart, the 20 and 100 SMAs converge around 1.0490, providing a strong dynamic resistance in the case of further recoveries. Despite the latest bounce, the pair is down for a third consecutive day, with lower lows and lower highs in the daily chart indicating that the bearish trend remains firm in place.
Support levels: 1.0380 1.0340 1.0300
Resistance levels: 1.0445 1.0490 1.0530