Bottom line: EURUSD structure remains bullish until prices stay above 1.0636 lows. The corrective drop looks complete around 1.0768 and bulls are back in control, targeting 1.1500.
Fundamental Outlook:
The holiday shortened week ahead would continue to focus on Oil prices, Gold, and how long Equity Markets would rally, as they digest respective stimulus packages.
The US Dollar closed the week with a bearish tone and remained under pressure. This was mainly due to Fed announcing additional $2.3 trillion package. This also led to Gold rising to monthly highs around $1691/92 levels. EURO outlook could weaken if Finance Ministers of Euro Zone fail to agree on the so called Corona Bond issue. The worst hit countries Italy and Spain are in favour as opposed by Germany and Netherlands.
WTI Crude prices rallied over 4% and reached 24.50 during early trading hours today. It is pulling back a bit and trading around 23.20 for now. Oil price outlook remains bullish as OPEC members reached an agreement to cut production by around 10 million barrels per day, going forward. The end of a price war between Russia and Saudi Arabia might send Oil prices higher towards 39.00 levels.
The number of affected cases in the U.S has now crossed over half a million at 560,433. The ongoing COVID-19 pandemic and dismal job numbers in the past 2-3 weeks will further add to the economic conditions over the next several months.
Technical Analysis:
EURUSD trades around 1.0960 levels attempting to break above the 1.1151 interim highs. Bulls are expected to remain in control as a potential Wave 3 rally could be in progress. It is critical for EURUSD to stay above 1.0636 levels to keep the above scenario intact.
The earlier rally between 1.0936 and 1.1151 was retraced up to fibonacci 0.618 levels before finding support around 1.0768. EURUSD could continue to print higher with 1.0768 potential support in place.
Most traders might be willing to remain long with protective stops at 1.0636 and target potential towards 1.1500 resistance, going forward.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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