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EUR/USD Set to Test Triple Bottom Support - Traders Brace for Bounce off! 


During the Thursday's early European trading hours, the EUR/USD currency pair failed to stop its previous session losing streak, and prints a two-day losing streak near below the 1.1900 level. This situation was mainly due to the broad-based U.S. dollar strength, backed by the Tuesday released U.S. better-than-expected manufacturing data. Although, the fresh disappointing U.S. Employment data failed to leave any negative impact on the U.S. dollar, which gave further support to the currency pair.

On the other hand, the bearish tone around the currency pair could be the reason for Tuesday's released negative Eurozone inflation, as discussed on Wednesday, which undermined the sentiment around the shared currency and drags the EUR/USD currency pair down. However, the currency pair could face further losses if final German and Eurozone PMI readings, scheduled for release on Thursday, bring meaningful downward revisions to preliminary numbers. At the moment, the EUR/USD currency pair is currently trading at 1.1819 and consolidating in the range between the 1.1789 - 1.1856.

The currency has not many things to cheer on the day. In turn, all moves of the EUR/USD pair could be associated with the previous factors. It is worth recalling that the negative Eurozone inflation was bolstering the pair downward momentum. Details suggested, "The Eurozone inflation dropped into the negative area in August, with the consumer price index dropping 0.2% year-on-year against July's 0.4% increase.

This data came even after the European Central Bank's multiple stimulus packages from EUR 4,500 billion to EUR 6,424 billion in the past months to support the economic damage from the coronavirus outbreak. So that why this data has a meaningful impact on the shared currency.

Apart from this, the reason for the currency pair bearish bias could also be associated with the reports that ECB was considering to undermine the shared currency value, which has recovered 6% this quarter alone. However, the ECB chief economist Philip Lane announced on Tuesday evening in an online conference.

The market trading sentiment has been flashing green across the pond since the European session started on the day; however, the positive sentiment around the equities was being supported by the U.S. better-than-expected manufacturing data, which fueled the hopes of economic recovery. The market traders across the pond largely ignored the fresh release of negative U.S. private-sector employment data. At the data front, the Employment in the U.S.' private sector rose by 428,000 in August, the monthly data published by the Automatic Data Processing (ADP) Research Institue revealed on Wednesday. This reading followed July's increase of 212,000 (revised from 167,000) and missed the market expectation of 950,000 by a wide margin.

Despite this, the broad-based U.S. dollar managed to maintain its previous day's gains and still flashed green. However, the modest gains in the U.S. dollar kept the currency pair under pressure. Whereas, the U.S. Dollar Index that measures the greenback against a bucket of 6-major currencies rose by 0.03% to 92.977.

Looking ahead, the market traders will keep their eyes on final German and Eurozone PMI readings, which is scheduled for release on the day. As well as, the Friday's Nonfarm Payrolls (NFP) will also be key to watch. In the meantime, the updates surrounding the fresh Sino-US tussle, this time over the South China Sea, and the coronavirus (COVID-19) updates, could not lose their importance.

Daily Support and Resistance

S1 1.168

S2 1.1772

S3 1.1813

Pivot Point 1.1863

R1 1.1904

R2 1.1955

R3 1.2046

The EUR/USD currency pair is trading with a bearish bias at 1.1824 level, holding right above the triple bottom support level of 1.1786. The closing of candles below 1.1786 level may extend the selling trend until the 1.1711 level, while the closing of candles above 1.1786 level may drive bullish bias in the pair until the 1.1887 level. The RSI is staying below 50, supporting the selling bias in the EUR/USD. Likewise, the 50 EMA is also in support of selling. Let's look for selling trades below the 1.1850 level. Good luck!

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