Bottom line: EURUSD might be preparing to turn lower from current levels or close to 1.2000 respectively. Bears are looking poised to push the currency lower towards at least 1.1500 handle, if not further. Waiting for a potential top to be confirmed on a break below 1.1700.
Fundamental Outlook:
EURUSD exchange rate is consolidating in a range just below the 1.1900 handle. It would be looking to take further cues from the FOMC and ECB Monetary Policy due Wednesday and Thursday respectively. The unsuccessful negotiations on new fiscal stimulus and US-China tensions could add pressure on the EURUSD in the coming weeks.
FTSE has dropped over -3.0% in the past two trading sessions and managed to close the week around 6086. With US-China talks over the weekend postponed indefinitely, any further rift might trigger risk aversion. Global equity markets remain vulnerable for another round of selloff, as investor sentiment might change very quickly.
GBPUSD has been trading below 1.3100 mark after having peaked around 1.3186 on August 06, 2020. The exchange rate might come under further pressure with the safe haven US Dollar set to gain. Risk assets and currencies (Gold, Global equity markets, NZDUSD, AUDUSD, EURUSD) remain vulnerable.
Technical Analysis:
EURUSD might be preparing to turn lower from close to 1.1900/1.2000 as bears remain poised to regain control. The currency might have carved a potential top just above 1.1900 mark but we need to see prices break below 1.1700 levels to confirm.
The recent price action might be suggesting a triangle consolidation since the 1.1700 handle remains intact. In that case, EURO bulls might be looking to push above 1.1915 mark before giving in to bears. Watch out for a bearish reversal from above resistance zone 1.1900/1.2000 respectively.
EURUSD has rallied from 1.0636 lows in March 2020, through 1.1915 mark last week. The above rally is an impulse wave, within the corrective structure. The rally has reached fibonacci 0.618 retracement of the earlier drop between 1.2555 (February 2018 high) and 1.0636 respectively.
Traders might be waiting for a bearish reversal around current levels to initiate fresh short positions. EURUSD might be setting up for a turn lower and remain in control of bears for several weeks, going forward. We shall confirm as price action unfolds.
Prepared by
Harsh Japee, Technical Analyst.
EURUSD Chart
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