Bottom line: EURUSD short term structure is looking bearish against 1.1422 resistance. Bears might be inclined to correct lower towards 1.1000 levels at least before deciding further direction. A sustained break above 1.1422 is required to push towards 1.1500 resistance.
Fundamental Outlook:
EURUSD exchange rate has dropped from 1.1422 towards 1.1167 in June so far and might continue to feel the pressure over the next month as well. As COVID-19 infections continue to rise in the US and Asia, Global Equity Markets are facing another selloff. The safe haven US Dollar is set to gain against EURO, GBP and AUD if risk aversion continues.
GBPUSD exchange rate trades below the 1.2400 mark as we prepare to publish this article. As Brexit deadline for transition approaches (June 30, 2020), GBPUSD might come under renewed pressure, this week. The exchange rate might continue to drop further and settle below 1.2000 levels in the near term.
FTSE had dropped over -1.5% over the last week, closing around 6157. The indice would be taking cues from Brexit developments along with its peers Dow Jones, SPX500 and DAX over the week. It remains to be seen if UK Prime Minister Boris Johnson would ask for an extension for Brexit transition tomorrow.
Technical Analysis:
EURUSD might have carved an intermediary top around 1.1422 levels, just ahead of 1.1500 resistance. It could be too early to confirm, but bears might remain inclined to drag prices lower towards 1.1000 and below 1.0636, going forward.
EURUSD had reached 1.1348 mark last week before pulling back. It is likely to drop below 1.1167, until prices stay below 1.1348 levels. If the above unfolds, it would confirm that EURUSD has topped out around 1.1422 and should be looking lower from here.
Also note the entire rally from 1.0636 through 1.1422 is looking corrective and might resume lower again. Most traders might be looking to book profits on the long positions taken earlier and stay aside for a while. Aggressive traders might also consider short positions against 1.1422 levels.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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