Bottom line: EURUSD long term structure continues to remain bullish against 1.0630 mark. The currency is soon approaching interim resistance towards 1.1150 levels and might correct lower before resuming towards 1.1500 resistance.
Fundamental Outlook:
EURUSD continues its march higher and gained over the last month, managing to test 1.1150 mark last week. This despite rising tensions between US and China, the US Dollar Index declined over the past few trading sessions as risk sentiment continued its gains. It remains to be seen how EURUSD would react to host of events including the ECB rate decision and US Non-Farm Payrolls this week.
GBPUSD has covered a lot ground from its May lows at 1.2080 mark. The British Pound gained against the US Dollar along with other majors and is now trading comfortably above the 1.2420 mark. We can expect some volatility to chip in as Brexit talks resume. It remains to be seen if the June deadline for transition is extended or not.
FTSE managed to gain over +1.5% last week, closing around the 6100 mark. The indice would be taking cues from its peers Dow Jones and SPX500; along with the proceedings over Brexit. Risk sentiments refused to budge over the rising tensions between US and China over the past couple weeks. It would be interesting to see how long the rally continues as the week proceeds.
Technical Analysis:
EURUSD bulls continued to print higher highs and higher lows over the last week and managed to reach 1.1140/45. Bulls might be poised to push through 1.1500 resistance in the medium term as the engulfing bullish pattern continued to hold since 1.0636 lows.
Structurally, EURUSD seems to have carved a corrective drop since 1.2555 highs in February 2018. It has found support around the fibonacci 0.786 retracement of the previous rally between 1.0340 and 1.2555 respectively. If prices manage to hold above 1.0636 lows, the currency might be heading towards 1.2555 looking at the bigger picture.
EURUSD must break above 1.1500 resistance to keep the above bullish structure intact. In the short term, we might witness corrective drops toward 1.1000 mark before rally could resume again. Ideally, prices should remain above 1.0775 levels, going forward.
Traders might remain long and add further around 1.1000 if prices manage to reach there. The protective stop goes below 1.0636 and projected target is above 1.1500 respectively. Only a break below 1.0636 changes the above structure.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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