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Bearish Sentiment Dominates in EUR/USD - Regression Channel In Play!


The EUR/USD continued with its previous session's losses and drew bids around the 1.1180, while represented a marginal rise on the day mainly due to the broad-based U.S. dollar selling bias triggered by the risk-on market sentiment. On the other hand, the heavy demand of the European Central Bank's (ECB) Targeted Long-Term Repo Operations (TLTRO) exerted some positive impact on the shared currency and contributed to the currency pair gains. The EUR/USD is trading at 1.1180 and consolidating in the range between 1.1199 and 1.1222.

Despite the increasing coronavirus cases in China and some U.S. states, the Asian stocks flashed green due to optimism that the monetary and fiscal support programs by most countries will help fight against the potential second wave of the coronavirus outbreak. Whereas, the Sino-American tension, as well as a geopolitical tussle among various Asian nations, turned out to be one of the main factors that kept a lid on on-going optimism.

Moving on, the Asian stocks could remain positive as China was still expecting to deliver more monetary stimulus. It should be noted that China's State Council recently signaled that the central bank will make more liquidity available to banks so they can borrow more.

Furthermore, the risk-on market sentiment was further bolstered by the weekly jobless claims report, which showed an improvement as compared to the previous week's figures. However, the minor declines were backed by the pace of re-openings across the U.S., which suggested further economic recovery that boosted risk-on market sentiment and urged investors into riskier assets rather than safe havens.

Despite heightened worries about a potential second wave, the broad-based U.S. dollar reported losses on the day, possibly due to optimism about the stimulus packages by most of the countries. As well as, the latest U.S. jobless claims suggested further economic recovery, which also boosted the risk-on market sentiment and pushed the USD lower. However, the losses in the U.S. dollar turned out to be one of the key factors that kept the currency pair higher. Whereas, the U.S. Dollar Index that tracks the greenback against a basket of other currencies slipped 0.03% to 97.373 by 12:41 AM ET (5:41 AM GMT).

Whereas, the Asian stocks are currently overlooking the renewed virus scare and lingering geopolitical tensions, the S&P 500 futures were struggling. However, the market traders are now looking forward to a meeting of the E.U. leaders to discuss the European Commission's plan to borrow 750 billion euros against the E.U. budget, as well as a revised 1.1 trillion euro budget proposal which is scheduled to happen later Friday through video conference.

Looking forward, the traders will keep their eyes on the U.S. Federal Reserve (Fed) Chair J. Powell's speech due to the lack of significant U.S. economic news. The virus headlines and US-China updates will be key to watch.

Daily Support and Resistance

S1 1.1084
S2 1.1189
S3 1.1258
Pivot Point 1.1295
R1 1.1363
R2 1.1401
R3 1.1506

From the perspective of technical analysis theory, the EUR/USD is keeping bearish momentum. On the 4 hour timeframe, the EUR/USD pair is trading within a downward regression channel, which provides resistance at 1.1250 level and support at 1.1156 level. The 50 EMA and RSI both are suggesting selling trends in the pair. Let's consider taking a selling trade below 1.1189 today. Good luck!

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