Bottom line: EURUSD long term structure remains bullish against 1.0636 lows. As the currency takes out major resistance around 1.1500 last week, bulls might be preparing to take a break. A corrective drop remains possible anytime soon.
Fundamental Outlook:
EURUSD raised through fresh highs around 1.1725 this morning ahead of the FOMC and Q2 GDP to be out this week. The US Dollar has faced heavy sell off against major currencies including the Japanese Yen. The EURUSD exchange rate might get further boost if the Euro Zone Q2 GDP prints better.
FTSE had dropped over -3.05 on Friday, closing around 6117 levels. The indice followed Global Equity Markets lower as risk sentiment turned negative. It might just be the beginning of a much larger selloff with COVID-19 infections still on the rise and US-China relation under stress.
GBPUSD exchange rate also increased marginally and touched 1.2850 today. The currency might come under pressure as it would be taking cues from a NO Brexit deal for now. Fisheries control remain a major hurdle, as negotiators called off talks at least for now.
Technical Analysis:
EURUSD bulls have managed to print yet another high around 1.1725 levels today. Last week, they had been successful in taking out a major resistance at 1.1500 mark. The rally continued higher as bulls register themselves in total control.
EURUSD rally from 1.0636 through 1.1725 looks to be complete as an impulse wave. Ideally, an impulse rally should be followed by a corrective drop. Keeping the above guideline in mind, high probability remains for a meaningful corrective drop.
EURUSD bulls have remained in control since 1.0636 levels and managed to carve a series of higher highs and higher lows. The break of 1.1500 resistance also marks a long term bullish reversal, going forward. Immediate support is now seen at 1.1167 levels.
Traders might be inclined to book profits on long positions taken earlier and wait for a meaningful corrective drop towards to unfold. EURUSD might drop towards 1.1000 handle, before resuming its rally above 1.2555 levels.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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