EURUSD, H1 & Daily
EURUSD has continued to hold a choppy range, largely unaffected by sub-forecast Ifo survey data out of Germany. The Ifo dropped to 101.8 from 102.3 in June, with the headline reading in line with Bloomberg consensus. The May number was revised up to 102.3, which means the reading actually improved marginally in the previous month, and the June number showed a stable expectations reading.
After the Ifo announcement, the pair ebbed back at Pivot Point level at 1.1645, mainly amid broadly firmer US Dollar. Trade tensions are likely to worsen, which recent price patterns suggest will benefit the Dollar more than the Euro. The Trump administration and its global counterparts are locked in their respective positions with little scope for negotiated resolution at this juncture. At the same time political uncertainties remain high with the immigration question dividing not just the German government, but turning into a test of the wider European Union just as heads of states prepare for the crucial June 29-30 summit on Brexit. The relative monetary policy paths of the Fed and ECB also favour the Dollar over the Euro.
Overall, Euro has been under pressure as risk aversion flares up again and trade war concerns deepen. However, EURUSD’s jump the last hourly session northwards of the 20-Day MA, which is also the immediate Resistance level at 1.1675, suggested that the bears have not gained control of the asset yet. As the pair remains well above Friday’s lows and above the immediate Support at 1.1612, the bullish momentum increases further. More importantly, the formation of a double bottom pattern, at the 1.1500 barrier, on May 30 and June 21, holds the bullish bias strong in the Daily basis.
Meanwhile. the Daily momentum indicators are still in denial of a possible bullish scenario in the near future, as both MACD lines and RSI remain below neutral zone. RSI has been inclining upwards since May 30 as higher lows have been identified below the neutral zone. MACD lines have flattened presenting a ranging market intraday. Therefore only if the price holds today above 20-Day MA and the MACD lines and RSI turn above neutral could a potential decisively move back to June highs be confirmed.
Next Resistance is at the confluence of 23.6% Fibonacci retracement level and the R2, at 1.1720. The Key Resistance level which will suggest a reversal of the decline seen since April, is the 38.2% Fibonacci level at 1.1850.
A slip today below 1.1600 would increase negative momentum and would alert a retest of the next Support at 1.1533. Key Support is the 1.1510 barrier, which if breaks will open the way towards 200-Weeks MA at 1.1400.
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Andria Pichidi
Market Analyst
HotForex
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