Bottom line: EURUSD long term structure continues to be bullish as long as 1.0636 lows remain intact. After several days of consolidation, it might have resumed towards 1.1500 resistance. Intraday support is seen around 1.0850/60 levels.
Fundamental Outlook:
EURUSD had managed to hit through 1.1000 levels last week. The EURUSD exchange would be taking cues from the German IFO Business Climate figures today, which is expected to print higher at 78.3. Also keep an eye on the France-Germany joint proposal submitted earlier, on the EURO500 billion recovery fund. The above fund was proposed to help hard hit European Countries recover from COVID-19 impact.
FTSE had dropped on Friday to 5872 lows before recovering and had managed to close almost flat at 5998. As US and UK markets remain closed today, price action is expected to remain subdued. Most indices including FTSE would be affected by the rising tensions between the US and China leading to a “Cold-War”.
Oil prices have managed to rise over the past few sessions as WTI Crude and Brent Crude push through major hurdles at $30.00 and $36.00 respectively. Oil prices are expected to rise as most economies re-open post lock down. We shall also bring a technical update on the expected price action tomorrow.
Technical Analysis:
EURUSD finally broke higher towards 1.1000 levels last week. After having spent several days in consolidation, bulls might be preparing to break above 1.1150 intermediary resistance. As we write this article, EURUSD seems to be approaching intraday support around 1.0860 levels. A bullish bounce is expected here and EURUSD could resume towards 1.1500.
EURUSD had rallied over 300 pips last week and is retracing lower for now. The fibonacci 0.618 retracement is seen towards 1.0860 and bulls might be looking to take control back from there on. Ideally EURUSD is expected to hold above 1.0636 intermediary support, going forward.
The RSI on the weekly chart has been displaying bullish divergence since 1.0636 lows, which could be considered as encouraging to bulls. We need to see a clear break above 1.1150 levels, for the rally to accelerate towards 1.1500 resistance.
Most traders might be willing to initiate further long positions between 1.0860/70 levels if prices manage to reach there. The protective stops remain below 1.0636 and projected target remains towards 1.1500.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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